UAE used to be a tax haven for startups and small business owners. Now, the situation has changed, and UAE has entered the world of Taxation. UAE has recently announced different types of taxes like VAT Consultancy Services and Corporate Income Tax (CIT). Business owners are not well aware of these new taxes and the procedure for their filing.
One such tax is Value-Added Tax (VAT), one of the most common taxes, and small business owners do not have extensive knowledge about this. In this regard, VAT consultancy services are essential to guide small business owners about VAT Return Filing in UAE. They provide VAT Return Filing Services to SMEs. VAT Training services in UAE are also available, which guide business owners in matters related to knowledge of VAT and its application.
What is Value-Added Tax (VAT)?
A value-added tax, or VAT, is a consumer tax imposed at each stage of the supply and retail chain to yield revenue for the government. VAT imposes a tax at every production stage, from the purchase of raw materials to their assembly. The total value-added at each point of sale is added to the final retail sale price, making the end-user liable for the full VAT. To be reimbursed from the previous step in the supply chain, each wholesaler, producer, or retailer in the supply chain adds their applicable percentage of VAT tax to a sale.
In contrast to the progressive income tax system, which charges people with higher incomes higher income tax rates, VAT is a flat tax across the board. One criticism of this tax policy is that lower-income people end up spending a more significant proportion of their earnings on goods. In UAE, many small businesses suffer from this tax, so VAT consulting services are required to help them.
When was Value-Added Tax imposed in UAE?
UAE was a tax-free region and was well-known to be a Tax Haven. No tax was used to be implicated to different businesses. Still, the new government has decided to impose taxes on various companies to increase the revenue for the government of the UAE.
Value Added Tax (VAT) was imposed in the UAE in 2018, and recently Corporate Tax was imposed in the UAE by the government, which will take its impact in 2023. VAT was recently introduced in 2018, and the people of UAE didn’t know much about the taxes, so this gave rise to the importance of VAT consultancy services in Dubai, UAE. Many accounting firms took this opportunity and introduced their VAT consulting services. To grow your business, finding the best VAT consultants in UAE is necessary.
Rate of Value-Added Tax on businesses in UAE
The general VAT rate is 5% and applies to most goods and services in the UAE, with some goods and services subject to a 0% rate or VAT exemption.
The 0% VAT rate applies to goods and services shipped outside of the Gulf Cooperation Council (GCC) member states, worldwide transportation, the supply of crude oil/natural gas, the first supply of residential property, and particular business sectors like health care and education. The value-added tax rate is 5% for other businesses in the UAE, and it has positive implications for businesses in UAE.
Criteria for VAT Registration in UAE
Value-Added Tax (VAT) applies to all businesses in the United Arab Emirates. Specific criteria must be met when a company registers for Value Added Tax (VAT). All businesses that want to register for VAT have been divided into three groups.
- Mandatory Registration
A company’s revenue is AED 375,000 or more must register for VAT filing.
- Voluntary Registration
If a company’s revenue is above AED 187,500 or up to AED 375,000, then the company can choose whether or not to register for VAT. They are not required to register the company, but it is always a good idea if the opportunity arises.
- Exemption from Registration
In such a case, if a company’s revenue is less than AED 187,000, it is not required to register for VAT. The company will be exempted from the tax, so small and newly started businesses will have room to breathe.
Steps for VAT Return Filing in Dubai
Taxable businesses must file VAT returns with FTA regularly, typically within 28 days of the end of the ‘tax period’ defined for each type of business. A ‘tax period’ is when the applicable tax must be calculated and paid. VAT Return Filing services can help business owners avoid non-compliance with the country’s tax policies.
The steps involved in the VAT return filing in the UAE are as follow:
- Make sure that you have a registered account with Federal Tax Authority
- Provide all the details to the FTA about the VAT Registered Business entity.
- Submit all the necessary information about VAT sales, expenses, and any other inputs in a single financial year
- Submit the calculations related to the Net VAT that is to be paid to FTA
- Submit a declaration to testify the accuracy of all the data you have provided to the FTA
Benefits of compliance with VAT Registration in Dubai
Implementing VAT will have implications not only on accounting procedures but also throughout the different organizations in UAE. In the short term, some goods’ prices may rise, affecting both consumers and businesses. But in the long run, the Value Added Tax will benefit the country’s economy. When the government begins to make profits, it will also benefit the companies and people in the country. The following are some of the long–term benefits of VAT Registration on businesses in the UAE:
- It will be a step forward in reducing dependence on the oil and gas industry
- It will allow effective and efficient utilization of resources
- It will allow creating of new job opportunities with VAT consultancy and training services
- It will help in maintaining accurate financial records
- It will increase customers’ confidence in businesses that comply with VAT policies
Role of VAT Consultancy services in Dubai
An expert colleague on the panel can help you navigate complex tax issues. The consultants in VAT consultancy services will assist you with everything from VAT return filing to payment. In Dubai, VAT is applied, and consultancy services play the following role in helping small business owners:
- Strong Monitoring
A VAT consultant acts as a keen observer, closely monitoring all transactions. They advise the company on which fronts action is required.
- Information on the country’s tax laws
A value-added tax consultancy services monitor these issues and alert a company when necessary. The services of the best VAT consultancy firm are required for better compliance with the ever-changing rules.
- Assistance in VAT registration
VAT registration in UAE is a time-consuming and technical procedure. A business frequently lacks information on how to complete it. Having specialized VAT consultancy services can be beneficial in this regard.
- Accurate submission
Once a company is VAT registered, VAT return filing is the next step. Tax authorities require that all businesses adhere to the standard format and meet the deadlines. A company cannot meet these requirements without Dubai’s best VAT consultancy services.
Benefits of VAT Training services in the UAE
Nearly two years after the introduction of Value Added Tax (VAT) in the UAE, many businesses are still unfamiliar with its basic ideas and concepts. VAT training services assist individuals and organizations in understanding the history of VAT, identifying its benefits and drawbacks, and understanding how it operates in the business setup of the UAE.
Joining a VAT Training service has numerous advantages. Some of them are listed below:
- It protects your company from potential tax non-compliance.
- It alleviates the fear and tension associated with tax obligations.
- It gives your employees more power through the knowledge of VAT.
- It allows you to calculate the correct amount of tax deductions
- It makes the VAT Return Filing procedure easier for a trained employee
Choosing the Best VAT Consultancy and Training Services in Dubai, UAE
Most UAE states decided to implement VAT on January 1, 2018. It was done to raise funds for infrastructure development. This posed a significant challenge for businesses because most of them were unfamiliar with submitting VAT returns in the UAE. To stay on the right side of VAT law, one should hire the best VAT services in Dubai to assist with return filing. The following things should be considered while choosing the best VAT consultancy and training services in Dubai:
- The reputation of the firm providing VAT consultancy and training services
- The license of the firm
- The professional environment of the firm providing VAT Services in Dubai
- Experience in the firm in handling VAT Return Filing in Dubai
- Customer support provided by the firm
Why Choose Lynchpin for VAT Consultancy and Training Services in Dubai, UAE?
Are you looking for VAT Consultancy and Training services in the UAE to assist you in becoming VAT compliant? Lynchpin Consulting and Training has already provided several businesses with VAT Consulting and Training Services in UAE. We can help you in preparing for VAT compliance in the UAE. Our VAT consulting services in the UAE include the following:
- Implementation of VAT-compliant Accounting Software for your organization
- Bookkeeping and Accounting services to keep you compliant with VAT policies of the UAE
- VAT Returns Filing services in accordance with UAE VAT policies
- VAT registration for companies in the UAE
VAT training sessions and certifications