What is VAT?
Value Added Tax (VAT) is an indirect taxation system adopted by more than 160 countries around the globe. Since its adoption by UAE in 2018, many companies are facing challenges to cope with the complexities it brought. VAT is levied during all steps of the supply chain and every concerned participant is responsible to ensure VAT compliance. VAT Registered Businesses only collect and pay the VAT on behalf of the government, and it will be the end consumer who bears the ultimate impact of the VAT. As simple as it may seem, there arise complex scenarios which need expert advice and opinion to stay compliant in UAE.
Due to the hefty fines and penalties that non-compliance brings, every business is looking for the best VAT services in UAE. We at Bestax Chartered Accountants have a team of the best tax experts with years of experience who can give you the top-notch VAT services in UAE while you can focus on growing your business.
VAT Registration Requirements:
Voluntary Registration: Any business or individual crossing the voluntary threshold limit of AED 187,500 in the last 12 months or expects to cross this threshold in next 30 days is eligible for voluntary VAT registration.
Mandatory Registration: Any business or individual that crosses the mandatory threshold limit of AED 375,000 must register for VAT within 20 working days of crossing this threshold or else there will be a late VAT Registration penalty for AED 10,000.
As mentioned above the law sets out the mandatory and voluntary VAT registration criteria for business. However, in some instances, it might be wise for a business to register for VAT in its initial stages even if they don’t meet the mandatory registration criteria. Once registered, such businesses can claim input VAT on all their taxable expenses and purchases, hence, lowering their costs by 5%. Moreover, being a VAT registered business also boosts your customer confidence and portrays a positive image in the market.
VAT registration procedure requires the applicant to submit a certain set of documents and information (in English and Arabic) to the Federal Tax Authority. If such documents are incomplete or provided information is incorrect, it may significantly delay the registration process.
We at Bestax Chartered Accountants assist our clients with VAT Registration services in UAE as follows:
- Eligibility assessment
- Preparation of checklist for required documents & information
- Process the registration application after a thorough review by our tax experts.
- Assistance in follow-up queries until TRN is issued by FTA
By taking such precautions, we ensure that your VAT registration is submitted in the best possible manner, so the approval does not get delayed beyond a reasonable timeframe.
VAT implementation exercise serves as a foundation stone for your business before it moves forward with financial transactions. Although it may seem very simple, a minor non-compliance or misunderstanding of VAT Decree-Law may lead to major mistakes in VAT Computation resulting in heavy fines and penalties from the authority.
Our best tax experts in UAE understand the importance of VAT implementation for your business provides the following services in this regard:
- Detailed analysis of your business model
- Review of in-place contracts and advising any changes thereof.
- Assessment of VAT applicability specific to your business transactions.
- Assistance in implementation of VAT Compliant accounting software
- Advice on record-keeping requirements by FTA
- Identification of tax risks specific to the business
VAT Return filing
Depending on the annual turnover of your business, you may be required to submit a periodic VAT returns to the FTA as below:
Monthly VAT Return filing: Turnover above AED 150 million
Quarterly VAT Return filing: Turnover below AED 150 million
However, the FTA at its discretion may assign a different VAT period to different businesses.
Taxable business must file VAT Returns to FTA on a periodic basis and usually within 28 days after the end of the relevant VAT period. Failure to meet the deadlines may attract incremental VAT penalties against late VAT return submissions and tax payments. These filings involve an accurate computation of VAT figures related to standard-rated, zero-rated, exempt categories, reverse charge, export, and import transactions.
For our clients, our tax experts and qualified chartered accountants provide the following VAT return services in UAE:
- Ensuring a well-maintained accounting system is in place
- Review of all business transactions and corresponding VAT Laws
- Review of all processes and advise on changes required
- Documentation review to ensure VAT compliance e.g. Contracts, invoices, etc.
- The figures calculated are in accordance with the supporting documents
- Verification of eligibility of input VAT claims
- Maximum input VAT claim possible
- Submission of VAT returns before the deadline
- Assistance in follow-up queries from FTA related to VAT returns submitted.
VAT Compliant Bookkeeping
After the introduction of VAT in the UAE, the dynamics for record-keeping have been shifted significantly. Now businesses are required to maintain their VAT-related records for a minimum period of 5 years as outlined by FTA. As VAT is a self-assessment tax, FTA obligates businesses to maintain their accounting records in full compliance and readily available for any audit by the authorities. Our team of qualified chartered accountants having well-versed expertise in VAT and accounting services ensures that clients accounting records are always up-to-date and ensure the records reconciliation with submitted VAT Returns.
Our team of best accountants and tax experts in UAE assist clients as below:
- Preparation and review of VAT Compliant accounting records
- Reconciliation of internal accounts with submitted VAT returns
- Maintaining the accounting records as per FTA requirements
- Weekly and monthly reviews to ensure up-to-date records
- On-site visits for physical verification of documents
- Advice and assistance to organizations supporting documentation as per FTA
- Advice on changes required thereof
If businesses have more input VAT, than output VAT, their net VAT position is refundable from the government. Moreover, the businesses purchasing taxable goods or services from local and making zero-rated exports also have VAT Refunds due from the government. To claim such refunds, FTA has designed a gateway to submit VAT refunds applications along with a certain set of supporting documents and related information.
Bestax Chartered Accountants provides below VAT Refund services in UAE:
- Preparation and review of VAT Refund application
- Ensuring completeness of application package as per FTA requirements
- Submission of VAT Refund application.
- Assistance in follow-up queries from FTA until approval stage of VAT Refund
We make sure that the application package is complete and fulfills FTA’s specific requirements before processing the VAT refund application to avoid unnecessary delays or rejections from the authority.
VAT Refund Dubai Expo 2020
The UAE government has recently introduced Cabinet Decision No. 1 of 2020 on the “Refund of VAT paid on Goods and Services connected with the Expo 2020 Dubai”. Under this scheme, participant businesses can recover VAT incurred on import or supply of certain goods and services even if such businesses are not registered for VAT in UAE. The law outlines certain conditions, criteria, and procedures to claim VAT Refunds for Dubai Expo 2020 participants.
Our best tax specialists in UAE provide the below services in this regard:
- Assessment of eligibility criteria
- Preparation of necessary documentation
- Application for Certificate of entitlement
- Submission of VAT Refund application
- Assistance in follow-up queries until the refund is approved and credit to a bank account
FTA has set out a certain condition where businesses need to cancel their tax registration number. A business must apply for VAT Deregistration in the below scenarios:
- If a business’ taxable transactions fall below the voluntary threshold of AED 187,500 in the last 12 months, it must apply for deregistration application within 20 days of such occurrence.
- If business stops making taxable supplies
If a business fails to submit a VAT deregistration application in a timely manner, it may attract an AED1000 penalty for a delay of each month.
Our best tax consultants in Dubai understand the importance of VAT Deregistration and assist the client with the below services to ensure a smooth and swift submission of VAT deregistration application as per FTA requirements.
- Assessment against VAT Deregistration criteria
- Submission of VAT Deregistration application
- Assistance in VAT Deregistration follow-up queries from FTA
VAT Penalties Reconsideration
There may come unfortunate instances, where business may be levied with heavy fines and penalties from the FTA due to different reasons such as late payment of taxes, late VAT return submissions, late VAT registration, or deregistration applications, or non-compliance with any other rules outlined by FTA. Any person or business receiving such penalties may apply for VAT Reconsideration application within 20 working days of such decision. The authority will review the application and may waive off the penalties if the business proves the case.
At Bestax Chartered Accountants we do:
- The in-depth analysis of each case.
- Assist the client in preparation of reconsideration application
- Guidance on any supporting documents to support the reconsideration application.
- Make sure that no supporting point is left unaccounted for before submission of the VAT reconsideration application.
- Follow-up with the authority on the status of the application
- Assistance in any follow-up queries from FTA with regards to application
VAT Audit by FTA
As per VAT Decree-Law, FTA may proceed with a business tax audit by giving a 5 days’ notice. By VAT Audit, FTA ensures that businesses are following VAT laws and that are not in tax evasion. If any non-compliance or tax evasion instances are found, FTA may levy hefty penalties depending on the type of non-compliance. Failure to provide FTA with required documents and records may also attract penalties.
The FTA has already commenced the Tax Audit process, particularly for Returns submitted or not submitted by businesses starting from Jan 2018 to the present. FTA will test the accuracy of accounting records as well as the filing of tax returns. Businesses will need to be ready to be able to completely justify all their numbers, statements, payments, invoices, record-keeping, and various other aspects of their VAT compliance that will come under increased scrutiny by the authorities.
Considering the risks attached with FTA Tax Audit it is imperative that the business make a thorough Health Check of its accounting record and Vat Returns. This will ensure an appropriate preparation before the formal notice of an audit is received and ample time to make necessary corrections. Please note that, as per VAT Law, penalties are considerably lower if an error is identified and adjusted by the business itself and before FTA Audit. So, we encourage businesses to perform preliminary VAT and accounting system health checks to avoid any major inconvenience during the FTA tax audit.
Given the above concerns, every single organization is now striving to be operationally ready for Tax Audit. To avoid any penalties after a formal notice is received from FTA, make sure your business’s financials are taken care of by the best tax experts in UAE – partner with Bestax Chartered Accountants today.
We encourage businesses to conduct VAT Health Checkups at least twice a year to ensure VAT compliance.
We at Bestax Chartered Accountant aids in the following ways before and after FTA VAT Audit:
- Detailed VAT health check-ups
- Assess, identify, and adjust any errors.
- Review of accounting records
- Representation before FTA Auditors on client’s behalf
- Provision of required documents and information to FTA in timely manners
VAT Voluntary Disclosure
If an error resulted in the calculation of payable tax being less than required by AED 10,000, the business must submit a voluntary disclosure to FTA within 20 working days from the identification of such error. Voluntary disclosures are a useful tool to rectify major errors in the VAT return submissions. Although there are associated penalties related to the submission of Voluntary disclosure, the penalties amount is considerably lower when compared to the identification of such errors by FTA.
We provide VAT health checkup services to our client, and if during our assessment any such errors are required which trigger submission of Voluntary disclosure, we assist our clients as below:
- Analyze and identify errors
- Estimation of potential penalties which may arise by submitting and not submitting VD
- Preparation of required information for Voluntary disclosure
- Submission of Voluntary disclosure
- Assist in follow-up queries from FTA until VAT voluntary disclosure approved.
Bestax Chartered Accountants serve as a one-stop solution for all your VAT services including VAT Registration services, VAT Return filing services, VAT Refund services, VAT Deregistration Service, VAT Penalties Reconsideration services, VAT pre-audit health check services, and all other compliance services related to VAT in UAE.
Get in touch today for free consultation.
M: 056 7981808