In 2018, Emirates business owners embraced a huge change. The UAE government raised tax revenue by introducing new VAT laws. This was done to minimize the government’s dependence on oil revenue and to increase investment in the economic infrastructure.
Initially, the UAE had the easiest taxation system across the world. But, a 5 percent value-added tax (VAT) was initiated in the country as of January 2018 – that made it a bit complicated. It has been a year now, still, many business companies are still undergoing complex taxation procedures.
Moreover, many firms are still uncertain about how the new tax laws might affect them. There are many questions arising. For example, what services and products are covered? What are the pros of VAT in UAE? Who has to register immediately?
For this reason, opt for the services of the best VAT consultancy in Dubai to help you understand and implement new tax policies. For a general understanding of VAT, keep reading the article below.
Basic Questions about VAT in UAE
Historically, VAT laws in UAE were quite simple. But a new trade agreement has changed the VAT policies, raising many questions. Explore the details of the new VAT laws and how it can impact your business. Here are some of the main questions about VAT for UAE business owners:
Do I Need VAT Registry?
If the value of your (company’s) taxable supplies is above AED 375,000 (nearly US $100,000) over the past 365 days, then you need to register for VAT. Or if it will surpass this threshold in the upcoming month (i.e. next 30 days).
Additionally, startup businesses can also register voluntarily if their imports, supplies or even expenses will exceed AED 187,500. These VAT rules are the same for a free zone or mainland organization.
Is There Any Standard Rate?
The new standard VAT rate is 5 percent on almost all products and services. But, VAT is not incurred on products and services that are considered more important to the economy. These goods or services are either exempted or charged 0 percent only.
There is a difference between the two. The companies that are exempt don’t need to register for VAT and if they do, they can’t retrieve any VAT they have paid. However, the other suppliers (with zero-rated products/services) can recover VAT that they pay on inputs. Input is a tax that is charged to the registered VAT companies when they make a new purchase from another trader.
What are the Pros of VAT in UAE?
VAT offers a number of benefits, both for the country as a whole and for your business. It is will generate revenue for the government (around AED 10 billion to AED 12 billion). This will have a great impact on UAE economy. VAT will also help to improve the country’s infrastructure for business owners. This means doing business in UAE will become easier in the future.
Moreover, the new VAT laws will make the UAE government more accountable. Business opportunities will increase and corruption and civil fraud prevalence will be minimized.
Conclusion
In short, new VAT policy is introduced for the betterment of the country and business owners. However, if you are still not sure about the new VAT rules, opt for the services of the Best VAT consultancy in Dubai for proper guidance. VAT professionals will help ensure your business is fulfilling all the tax obligations and what can be done further to improve profitability.
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<!--td {border: 1px solid #ccc;}br {mso-data-placement:same-cell;}-->How to prepare for VAT Audit in UAE
