Value Added Tax (VAT) is one of the most common types of indirect tax applied in most of the countries. United Arab Emirates and Saudi Arabia have already implemented VAT effective 1st January 2018 and other GCC countries are expected implement it in near future.
The value added tax rates are 5% (standard rated) and 0% (Zero rated) at the moment. VAT will provide the UAE with a new source of income which will be continued to be utilized to provide high -quality public services. It will also help government move towards its vision of reducing dependence on oil and other hydrocarbons as a source of revenue.
Impact of VAT in general
VAT will apply to the majority of transactions in goods and services with an exemption for limited transactions.
Due to introduction of VAT the cost of living is likely to increase slightly, but this will vary depending on an individual’s lifestyle and spending behavior. If an individual spends mainly on those things which are relieved from VAT, he is unlikely to see any significant increase.

VAT Services includes:
 

• Registration for TRN with Federal Tax Authority (FTA)

• Implementation of VAT in the organization

• Review of accounting transactions to be compliant with VAT

• Filing of monthly/ quarterly and yearly VAT returns

• Applying for VAT refund return forms

• Filing of voluntary disclosure forms

• Awareness session to a team of people

• Applying for deregistration

• UAE National refund

• Business registration for tourists VAT

• Refund Excise Tax

 
VAT Registration in UAE Process

Al Araidi Tax Agency in Dubai, UAE can assist you to go through a simple process to start with VAT registration in UAE.

• Provision of relevant documents for VAT registration

• Receive you trade license, proof of business setup, banking details & signatory papers

• Prepare documents to apply for business authorization like POA, MOA etc

• Relevant description of Business activities in the form of declaration.

• File your income from the previous 12 months and provide expected a figure

• Financial experts will calculate the value of imports and exports

• Manage your planning in order to deal with GCC officials & customers.

 
Impact of VAT on businesses

All businesses shall carefully record their business income, costs, assets, liabilities and associated VAT charges irrespective of the size of the operations.
Registered businesses and traders will charge VAT at the prevailing rate on all of their sale of goods and services (output tax) and incur VAT on goods/services that they buy from suppliers (input tax). The difference between these sums is considered as refundable tax or VAT payable to the government.
VAT-registered businesses must report the amount of VAT they have charged and the amount of VAT they have paid to the government on a regular basis through filing of VAT returns monthly, quarterly, annually or for any other period that has been confirmed by the Federal Tax Authority (FTA) in VAT registration certificate of the business.
 
Explore more about VAT

Registration for TRN with Federal Tax Authority (FTA) Criteria for registering for VAT
A business must register for VAT if its taxable supplies and imports or taxable expenses exceeds AED 375,000 during last 12 months.
It is optional for businesses whose taxable supplies and imports or taxable expenses exceed AED 187,500 but do not exceed AED 375,000 during last 12 months.
Taxable supplies: For the purposes of understanding whether a registration obligation exists, a taxable supply refers to a supply of goods or services made by a business in the UAE that may be taxed at a rate of either 5% or 0%. Imports are also taken into consideration for this purpose, if a supply of such goods or services would be taxable if made within the UAE.
A business house pays the government the tax that it collects from the customers, but at the same time it receives a refund from the government on tax that it has paid to its suppliers in the form of adjustment against tax collected from customers.
Foreign businesses may also recover the VAT they incur when visiting the UAE.
 
How to register for VAT?

There is an application to be filled by providing certain documents and information as required based on the legal structure of the business. After providing the sufficient documents and information, FTA may issue the Tax Registration Number (TRN) within 20 working days. Spectrum can register the business for obtaining TRN number. We have a dedicated team of professionals, who can perform registration process without any problems. We collect the documents and information that are required for VAT registration and fill the form after creation of user id and password of your choice and follow-up for the status after submitting the form for registration.
 
On which businesses does VAT apply?

VAT applies equally on tax-registered businesses managed on the UAE mainland and in the free zones. However, if the free zone falls under the list of designated zones that have been approved by UAE Cabinet, there is a separate set of VAT rules that are applicable for designated zones.
 
Filing a tax return for VAT

At the end of each tax period, VAT registered businesses or the ‘taxable persons’ must submit a ‘VAT return’ to Federal Tax Authority (FTA). A VAT return summarizes the value of the supplies and purchases a taxable person has made during the tax period, and shows the taxable person’s VAT liability.
Liability of VAT: The liability of VAT is the difference between the output tax payable (VAT charged on supplies of goods and services) for a given tax period and the input tax (VAT incurred on purchases) recoverable for the same tax period.
Where the output tax exceeds the input tax amount, the difference must be paid to FTA. Where the input tax exceeds the output tax, a taxable person will have the excess input tax recovered; he will be entitled to set this off against subsequent payment due to FTA.
 
VAT in GCC

The UAE needs to coordinate VAT implementation with other GCC countries because she is connected with them through 'The Economic Agreement between the GCC States' and 'The GCC Customs Union'. The GCC has always worked together in designing and implementing new public policies as such collaborative approach is best for the collective development of the region.