4 Quick Facts About Registering for VAT in the UAE

THE TRUTH About VAT in the UAE

Registering for VAT in Dubai should not be taken gently and certainly now not regarded section of the process of operating in Dubai, you only need to register if you qualify or if you exceed a threshold. Failing to adhere to the Federal Tax Authorities in Dubai is a serious offense and can incur heavy penalties. Below are 7 records that you have to recognize earlier than registering for VAT in Dubai.

Individual Responsibility

When you register for VAT you are registering the character that is running a business, no longer the enterprise itself. Ultimately it is the character who will be accountable the vat and the duties that come with registering for VAT with the FTA. This duty ought to not be taken lightly and it is eventually linked returned to your Emirates ID.

A character can solely preserve one TRN for VAT purposes at any one time. It is your accountability to make sure that reproduction functions are not submitted.

When do I want to register for VAT?

There is no want to register for VAT with the FTA when beginning your change license. There is so a good deal incorrect advice on this matter. The principles requirements of VAT are constant and consequently, it is no longer a desire to register when setting up a company.

Mandatory Registration – if you meet the following criteria then you must register immediately:

  • Your turnover was once greater than AED 375,000 in the final 12 months; or
  • You anticipate that your turnover will be greater than AED 375,000 in the subsequent 30 days.

Voluntary Registration – if you meet the following criteria then it is your preference alternatively your next 12 months will play a vital element on whether you have to register voluntarily or not:

  • Either your turnover or charges (which will be difficult to VAT) have been extra than AED 187,500 in the ultimate 12 months; or
  • You assume that either your turnover or prices (which will be a challenge to VAT) will be extra than AED 187,500 in the subsequent 30 days.

Exemption from VAT

If you have an alternate license in the UAE (LLC or Freezone) and do not function in Dubai and obtain all profits from outside UAE, then you may qualify for exemption from VAT, but you nevertheless MUST practice for this through the FTA. Banks will request this and may also hold repayments as a result. This is also regarded as zero-rated supplies.

Branches are not separate felony entities

Only the entity of which they are branches practice for registration where that entity meets the applicable criteria. Even if you are running by using branches in extra than one Emirate, only one VAT registration is required.

Updating your details on the FTA portal to avoid AED 15,000 Penalty

keep up to date

AED 15,000 The failure of the Registrant to inform the Authority of any circumstance that requires the change of the information pertaining to his tax record saved by Authority

FTA in Dubai kingdom that if you fail to inform them of adjustments in any situations you will incur a penalty of AED 5,000 initially and AED 15,000 for repeating it.

The principal gadgets that go out of date are as follows:

  • Trade License
  • Emirates ID
  • Possible Passport Copy

The above are fundamental items that should always be updated when they are renewed, however the troubles arise when you are updating the items.

The FTA portal has been updated to make mandatory the need to encompass your financial institution account and power of authority, these objects had been not mandatory when many groups registered for their TRN wide variety in 2017.

Also for some agencies, the FTA uae requires them to grant a monetary announcement to verify the income and fee for the last 12 months. I would surely urge business owners to seek advice from a tax consultant when doing this as many groups are incorrectly registered for VAT and supplying such monetary statements ought to cause the FTA to request other information subsequently leading to a penalty of either AED 10,000 for failing to deregister or AED 3000++ for submitting and mistaken return.

To be sincere this is all it takes to preserve your FTA portal updated and in addition to the above the basics such as contact important points can only be up to date via an electronic mail to the FTA and not thru the portal.

Ali Afzal is the Managing Director and VAT accounting Consultant in UAE for Profits Plus Accountants registered as Profits Accounting and Bookkeeping a British Owner Managed Accounting Firm in Dubai. We manage over 100 clients vat submissions and cater for clients from around the World. We are registered with Xero Cloud Accounting as a Silver Tier Partner and our fees start from AED 850 per month. Contact me on [email protected] for more information.

 

VAT Submission Deadline [must know]

vat submission dealine

VAT Submission Deadline

VAT registered business owners have a responsibility to submit their VAT return to FTA on time every 3 months (the first submission period after you register will vary for each company). According to the FTA, AE, fine for the failure of the person conducting Business to keep the required records and other information specified in Tax Procedures Law and the Tax Law is AED 10,000 the first time and AED 50,000 if repeated.

Administrative penalties for violations have been issued by Cabinet Decision No. (40) of 2017 and can be found under the Legislation section on the AE FTA  portal.

VAT Submission Procedure

Every 3 months you need to calculate the difference between your input and output tax and submit the summary to the FTA AE with a breakdown of the emirates in which the sales were generated. Ideally, you should generate a P&L and Balance Sheet at the same time and there is a very good reason for doing this.

Although the deadline to submit your VAT return to the FTA is 28th of the following month after the VAT Period, you should submit the FTA VAT return to the FTA by the 25th. You need to give yourself enough time to make the VAT return payment to the FTA. To learn more about how to make the payment please refer to our blog post on Making A Payment To The FTA.

Profits Plus Accountants

We are a British Accounting Firm in the UAE based in Dubai, we help local businesses to navigate the FTA requirements and we use the most advanced cloud accounting software in the World to make sure that you remain 100% compliant.

Speak to Mubashir Malik, a Managing Partner at the firm. You can reach directly on email [email protected].

Note: www.profitsplus.ae is a domain belonging to Profits Accounting and Bookkeeping, an accounting and bookkeeping firm registered with Dubai Economy, Trade License No. 796316.

 

Submitting a VAT Correction?

Considering submitting a correction to your previously submitted vat calculations?

If you become aware that a VAT Return that you have submitted previously contains errors that resulted in a calculation of payable tax not more than AED 10,000, then you can correct this error in the current VAT Return in which you have discovered the error. Under the “VAT Amount” column, you should only declare the VAT amount of the correction.

If the error has resulted in a calculation of payable tax of more than AED 10,000, you should make a Voluntary Disclosure. We would urge you to review the FTA publication named Voluntary Disclosure

To avoid doing this incorrectly contact the experts.

Profits Plus Accountants

We are a British Accounting Firm based in Dubai and we help businesses navigate the FTA requirements using the most advanced cloud accounting software in the World.

We make sure that you remain 100% compliant.

As a Silver Partner of Xero Cloud Accounting Software, we have a local team based in Dubai with over 20 years of experience (collectively).

If you are looking for an accountant in Dubai then speak to Manam Tariq, Senior Accountant at the firm. You can reach him on [email protected].

Note: www.profitsplus.ae is a domain belonging to Profits Accounting and Bookkeeping, an accounting and bookkeeping firm registered with Dubai Economy, Trade License No. 796316.

What is a FAF File? [FTA Audit File]

fta audit file

The FTA has produced a very concise document on the required functions of accounting software which are needed to produce the FTA Audit files (“FAF”) for VAT and Excise Tax should they ever request it.

What is accounting software?

Accounting software should be a key part of any modern growing business whether a retail store or a service provider and it is not something reserved just for large corporations.

Currently, there are many accounting software solutions being used in the UAE the key players in the market are:

When selecting an accounting solution business owners should ensure that the solution complies with the FTA registration requirements.

Any competent accounting software should be able to produce Sales Invoice, Accounts Receivable, Accounts Payable, and General Ledger but the FTA has very specific requirements, namely the need to generate a FAF File.

FTA Audit File

FAF is something that could be requested by the FTA whilst conducting a periodic audit to ensure that tax and returns have been prepared correctly. It is strongly recommended that businesses check with their software vendors to make sure they are able to produce FTA Audit Files (FAF) if required, otherwise it would be a very costly exercise to do on-demand.

NOTE: It may be possible that your software is able to produce data in FAF but your accounting partner failed to implement and monitor the documenting of the transactions as per the FTA Requirements and you only realize when the FAF is requested at which point it could take weeks to rectify.

Key Elements to be present in the FTA Audit File (FAF) are:

  • Company Information such as Company Name and TRN No.
  • Master Files
    • Supplier File
      • Name of Supplier
      • Location of Supplier by Emirates
      • TRN No. if applicable
    • Customer File
      • Name of Customer
      • Location of Customer
      • TRN No. if applicable
    • Source Documents
      • Purchase Invoices, Imports, Credit Notes (with all details)
      • Sales Invoices, Credit Noted Issued to Customers (with all details)
      • Payments
        • Transaction Date
        • Payment Date
      • General Ledger
      • Product File

In summary, your accounting software must be able to produce all or any of the above if requested by the FTA during a periodic audit of your VAT Return.

Profits Plus Accountants

We are a British Accounting Firm based in Dubai and we help businesses navigate the FTA requirements using the cloud accounting software in the World.

We make sure that you remain 100% compliant.

As a Silver Partner of Xero Cloud Accounting Software, we have a local team based in Dubai with over 20 years of experience (collectively).

If you are looking for an accountant in Dubai then speak to Mubashir Malik, a Managing Partner at the firm. You can reach him directly on [email protected].

Note: www.profitsplus.ae is a domain belonging to Profits Accounting and Bookkeeping, an accounting and bookkeeping firm registered with Dubai Economy, Trade License No. 796316.

Cheapest Way To Pay VAT In The UAE [FACT]

How to pay the FTA your VAT

In this article, we discuss the methods of paying your VAT liability to the FTA:

  1. Paying via e-Dirham or credit card through the FTA Portal. Log in and pay via e-dirham or Credit Card (Visa or Mastercard). This option is simple, quick and for those last-minute payments probably the best option. A payment using an e-Dirham card will typically incur a charge of AED 3, while a payment using a credit card will typically incur a charge between 2% – 3% of the total payment amount.
  2. Paying via Bank Transfer (GIBAN) – Local Transfer. A GIBAN is a unique IBAN number that is given to every taxable person and should be displayed on your FTA Portal. Once you get your GIBAN you can then proceed to make a normal local bank transfer via your bank and add the FTA as a beneficiary using the GIBAN number and FTA Details. Please note this option can take up to 24hrs to appear in your account. In case you made the transfer to the wrong GIBAN, it is not the FTA’s responsibility to receive/ follow up on the payment and therefore, you are required to contact your bank and fix the matter. In case a payment is not received on time, a penalty of late payment will apply.
  3. Exchanges (UAE Exchange or Al-Ansari Exchange). It is now possible to make a payment to the FTA through a number of exchanges in Dubai. You will require the following information:
  • TRN No
  • GIBAN Number
  • Amount Payable
  • And take some ID (always handy)

This is the cheapest way to pay your VAT to the FTA but make sure to do it 2-3 days before the deadline.

REMEMBER: In case a payment is not received on time, a penalty of late payment will apply. In order for the payment to be credited to your account by the 28th you should make the payment before by the 25th of the month (at the latest). 

For help on submitting your VAT Return, Profits Accounting and Bookkeeping offer a vat submission-only service. Visit our website on tax consultant in Dubai. It is possible that this information is out-of-date and you should confirm the facts by visiting the FTA Payment User Guide by clicking FTA Portal.

Understanding VAT in the UAE 2019

Value-Added Tax or VAT is a tax on the consumption or use of goods and services levied at the point of sale. VAT is a form of indirect tax and is used in more than 180 countries around the world. All OECD countries except for the US have VAT (or a variation). While it feels exactly the same as a general sales tax to end-consumers, VAT is a more sophisticated tax and overcomes many challenges that affect the general sales tax.

VAT is charged at each step of the ‘supply chain’. End consumers generally bear the VAT cost while registered businesses collect and account for the tax, in a way acting as a tax collector on behalf of the Federal Tax Authority.

NEED TO MAINTAIN RECORDS

VAT registered businesses will need to charge and account for VAT however, all businesses are required to maintain their business records and other information as specified in Tax Procedures Law and the Tax Law.

The fine for failure of the person conducting Business to keep the required records and other information specified in Tax Procedures Law and the Tax Law is AED 10,000 the first time and AED 50,000 if repeated.

Administrative penalties for violations have been issued by Cabinet Decision No. (40) of 2017 and can be found under the Legislation section on the FTA website.

EXECUTIVE REGULATION

As per Article 2 of the Cabinet Decision No. (36) of 2017 on the Executive Regulation of Federal Law No. (7) of 2017 on Tax Procedures Accounting Records and Commercial Books shall include the following:

accounting books in relation to that business, which include records of payments and receipts, purchases and sales, revenues and expenditures, and any business, and any matters as required under any Tax Law or any other applicable law, including:

1) Balance sheet and profit and loss accounts.
2) Records of wages and salaries.
3) Records of fixed assets.
4) Inventory records and statements (including quantities and values) at the end of any relevant Tax Period and all records of stock-counts related to Inventory statements.

BRITISH ACCOUNTANTS IN DUBAI

Profits Plus Accountants are British accountants based in Dubai. We deploy the most advanced software in the World in order to make sure that you remain 100% compliant and we leave no room for error when it comes to your accounting records.

Mubashir Malik the Managing Partner can be reached on +971529834145 and welcomes meeting in person to discuss how he can help your business or email us on [email protected]

www.profitsplus.ae is a domain belonging to Profits Accounting and Bookkeeping, an accounting and bookkeeping consultancy registered with Dubai Economy, Trade License No. 796316 and trading with the name Profits Plus Accountants.