This is where you should answer the most common questions prospective customers might have. It’s a good idea to cover things like your return policy, product warranty info, shipping and returns, etc. Check out the examples below.
Introduction to TAX system?
The Gulf Cooperation Council (GCC) announced the introduction of a new tax system VAT-Value Added TAX in all its member countries.
What is VAT?
Value Added Tax (VAT) is the tax levied at every level of value addition done to the product across the supply chain. It is levied at every point of sale from manufacturer till it is sold to an end consumer. This achieved by allowing tax paid on purchase known ‘Input Tax Credit’ or also known as ‘input VAT’ to be adjusted with the VAT collected on sales knows as ‘Output VAT’. Ultimately, the entire tax is paid by the consumer.
How does VAT system work?
VAT is a consumption-based tax with the provision to allow Input tax credit -Tax paid on purchases to be utilized or set-off against the VAT liability Tax collected on Sale. If there is any balance liability after adjustment, the same needs to be paid to the government.
VAT Registration in UAE
Being registered under the VAT law means that a business is acknowledged by the government, as a supplier of Goods and Services and is authorized to collect VAT from customers and remit the same to the government. Only VAT registered businesses will be allowed to do the following:
- Charge VAT on taxable supply of goods and services
- Claim Input Tax Credit on VAT paid on their purchases, which will be deducted from VAT liability on sales
- Payment of VAT to the government
- Periodic filing of VAT return
Who should register under VAT?
Are all businesses liable to register under VAT? No, only those businesses crossing the defined annual aggregate turnover threshold are liable to register under VAT. Based on the registration threshold, a business will either be mandated to register or as an option, a business can apply for registration or can seek exemption from VAT registration.
VAT rate in UAE?
With the introduction of VAT in UAE from 1st January 2018, VAT rate at 5% will be applicable on supply of goods and services in the State. The businesses registered under UAE VAT are responsible to levy VAT @ 5%, collect it and remit it to the government.
Do all companies need to get VAT registration in UAE?
Companies whose taxable products, services, imports and exports exceed the threshold of AED 375,000 annually, need to mandatorily get VAT registration in UAE. Whereas, a business may opt to register for VAT voluntarily if their products, services, imports and exports are less than the mandatory registration threshold, but exceed the voluntary registration threshold of AED 187,500.
Are businesses liable to keep an account of VAT & finances?
Yes, businesses will be liable to maintain book of accounts for their business profits, incomes and costs. Companies will also have to document charges related to Value Added Tax separately. Along with the maintain of financial records, commercial organizations would also take assistance from accounting and auditing firms in UAE.
Are VAT invoices supposed to be filed and retained?
Yes, VAT invoices need to be retained for a period of 5years. These invoices need to be presented as and when required by the Federal Tax Authority.
When do taxpayers require to file VAT returns?
The tax paying companies in UAE are required to file returns with the FTA on regular intervals. As slated, the returns need to be filed quarterly or whenever instructed by the FTA, i.e. within 28 days from the end of the tax period as per the measures determined in the VAT legislation. VAT returns need to be filed by FTA eservices.
How will the government collect VAT?
Businesses will be responsible for careful documentation of their business income, costs and associated VAT charges. Registered businesses and traders will charge VAT to all of their customers at the prevailing rate and incur VAT on goods / services that they buy from suppliers. The difference between these sums is reclaimed or paid to the government.
Will real estate have Vat in UAE?
The VAT on real estate will depend on whether it is a commercial or residential property. Supplies (including sales or leases) of commercial properties will be taxable at the standard VAT rate (i.e. 5%). On the other hand, supplies of residential properties will generally be exempted from VAT. This will ensure that VAT would not constitute an irrecoverable cost to persons who buy their own properties. To ensure that real estate developers can recover VAT on construction of residential properties, the first supply of residential properties within 3 years from their completion will be zero-rated.