VAT Consultancy and Ad Hoc services in UAE
Value Added Tax (VAT) is introduced in UAE with effect from January 1, 2018. Since the inception of VAT, HLB HAMT has ensured that all its clients are compliant with local VAT rules & regulations and all necessary administrative formalities are fulfilled on timely basis.
HLB HAMT is providing VAT consulting services in Dubai, Abu Dhabi, Sharjah, Ajman, Fujairah, Ras Al Khaimah & Umm Al Quwain. The tax team at HLB HAMT makes the complex VAT compliance process simple for the clients and support in building a sustainable Tax & compliance strategy to make the organization fully VAT compliant.
HLB HAMT has successfully provided below tax services in UAE to various clients since the implementation of VAT and ensure to improve the services by continuous updation of VAT rules, processes and techniques.
VAT Implementation in UAE
For the newly registered taxpayers, the tax team at HLB HAMT prepares the organization to embrace the changes that will be implemented to be VAT compliant with current tax rules.
Firstly, the existing record maintenance practice will be reviewed, and it will be ensured that all the financial transactions are recorded properly as per UAE VAT rules and the books of accounts are accurate to-date. The books of accounts are the basis of identifying crossing of annual threshold limits, identify eligibility for deregistration, primary demand by FTA to conduct an audit.
Secondly, based on the current business models and transaction scenarios, effective methods will be implemented to determine the time of supply, identify the place of supply and proper classification of different supplies into standard rate, zero rate, exempt or Out of scope category.
Current accounting system will be reviewed and ensured that all the functions and accounting methods are compliant with VAT rules to ensure accurate output of tax transactions. Different transaction scenarios will be identified to chalk out tax rates applicable and accordingly tax codes will be drafted. These tax codes will then be mapped to each specific transaction which will reduce the hassle at the time of return filing and ensure accurate VAT reporting to the FTA.
HLB HAMT will assist all the organizations to be VAT ready by conducting following tasks:
- Review each business processes – mainly pricing, procurement, invoicing, logistics etc. in line with VAT requirements.
- Ensure books of accounts are accurate and upto date
- Build organizational competency by educating your teams on the fundamentals of VAT and its impact on your business
- Explore current software for VAT compatibility and suggest any changes to be made to the existing software or suggest new software depending on the business requirement.
- Inform your vendors and customers about VAT and the subsequent impact on transactions
- Preparation &Transitioning to VAT regime.
VAT OUTSOURCING IN UAE
HLB HAMT has a team of dedicated and experienced tax professionals who are continuously trained and updated with current law changes having impact on taxable areas of the clients. Any update by FTA is reviewed and discussed within the team and an analysis is done to identify the impact of the tax law amendments which is then communicated to the clients on timely basis.
VAT compliance is a critical function which needs to be monitored on daily basis and for each type of transaction to ensure accurate recording in the books of accounts and correct reporting to FTA within the due date. Organizations choose to appoint professionally qualified staff to manage VAT-related tasks and ensure compliance of the same.
However, outsourcing VAT accounting in UAE has become the norm or the usual practice of companies. When it comes to outsourcing, companies have many doubts about how exactly it will work and if it’s a good decision they could make to improve their business. It’s one of the best ways of taking your business on the road to success.
Frequently Asked Question – VAT
- What is the deadline for VAT Return filing and payment; are the dates different for payment and return?
The deadlines for VAT Return filing and payment are defined in the Tax Registration Certificate and these are either monthly or quarterly based upon the conditions by FTA. The due date for VAT Return and payment is 28th day after the tax period closing (monthly or quarterly). There is no different dates for Return and payment.
- How to remit VAT amount collected to Govt.?
There are various method available to make the payment to FTA they are:
- Online Bank transfer
- Payment to bank teller or exchange house teller
- E-Dirham card
- Credit Card
- Do we need to keep mandatory books of accounts for VAT?
Yes, there are a certain set of documents to be kept by all registered persons for VAT, as per the guideline issued by FTA. A certain set of documents should be kept for a period ranging from 5-15 years.
- Whether we are eligible to claim all Input VAT incurred in UAE?
Yes, input VAT incurred in UAE are eligible to claim and adjust against the output VAT, except on those specific cases announced by FTA. Most of the input VAT is eligible to claim if this is not personal, entertainment or leisure, or anything not related to the business.
- What are the consequences for nonregistration for VAT or delayed Registration?
Failure to register is an offence and FTA will charge a penalty for non-registration if the registration threshold conditions are met. On all registration applications, FTA is issuing the Tax numbers unless the application is not complete or wrong information is uploaded or FTA requires some amendments or additional information.
Other consequences not registered, we cannot claim any input VAT incurred, and eventually, the cost of operations will go up. Also, the person needs to pay all the tax amount due on the supplies he had made during such delay in the application of registration.
- What are the services in UAE which is not subject to VAT?
All goods and services except below are subject to VAT: These are called exempted goods and services.
- Public passenger transport like metro, public buses, taxi etc.
- Residential rent and lease.
- Certain financial services.
Apart from exempted, there are goods and services which are zero rated.
- Export of goods or services
- International transport of passengers and goods
- Investment precious metals
- Means of transport
- The first supply of a newly constructed
- Educational services
- Healthcare services
- Whether an individual or a non registered person can claim any input VAT incurred?
No, only the registered persons are eligible to charge VAT from customers and such non-registered persons cannot claim any input VAT. Most of the individual transactions are in the nature of end-user and as such we may not be able to register in the capacity of an individual. If we do business transactions in economic terms, then we need to register and collect VAT.
- Residential rents are VAT able or is exempt?
No, residential lease or rentals or sales are exempt and is not subject to VAT. However, if the residential building is in the nature of services apartment and subject to certain conditions shall be taxable at 5%. Similarly, all commercial leasing/sale/rent are subject to VAT, subject to the terms and conditions prescribed by the FTA.
- Any specific provisions applicable on Free Zone companies?
FTA has announced a list of Designated zones in UAE, and only those who are announced as Designated Zones shall follow special provisions as published by FTA. The designated zone has special treatment for supply of goods. (e.g. supply of goods within designated zone shall be treated as out of scope and no VAT is applicable. But services supplied by designated zone companies are in the same line as mainland companies and shall follow the same rules as applicable for mainland company i.e. normally taxed at 5% unless exempt or zero-rated.
- A UAE registered taxpayer has a project in Lebanon. He buys goods from Canada and these are delivered directly from Canada to Libya. How should this transaction be shown on the VAT return?
This transaction is out of the scope of UAE VAT as the goods are not touching UAE soil. This transaction will not be included on the VAT return because it is out of scope of UAE VAT. It is advisable that the local tax payer maintains documents to prove that the delivery of the goods was in the foreign country. These documents could be customs declaration documents issued by the receiving country, transportation documents from the supplier to the foreign country.
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