VAT
VAT in UAE
Value Added Tax (VAT) is an indirect tax applied to the consumption or use of goods and services at each point of sale, with the end consumer ultimately bearing the cost. Businesses and organizations are responsible for collecting VAT on behalf of the government. Since the introduction of VAT in the UAE on January 1, 2018, consumers are required to pay a 5 percent tax on goods and services they purchase. Utilizing professional VAT services in the UAE can simplify VAT compliance for your business. Being registered under UAE VAT law formally acknowledges your business with the government. Engaging a VAT service provider in the UAE can streamline VAT-related processes, ensuring your business adheres to the Emirati VAT laws and regulations. Aebiaccountax is a leading VAT service provider in the UAE, offering specialized services such as VAT registration, deregistration, VAT return filing, VAT accounting, and more.
VAT for UAE Business
The UAE introduced Value Added Tax (VAT) on January 1, 2018, with a 5 percent rate on goods and services, creating an additional revenue source to reduce reliance on oil. This income supports public services and promotes sustainable consumption. VAT consultancies across the UAE assist businesses with VAT registration, deregistration, accounting, return filing, and advisory services, simplifying compliance. These services help businesses avoid unnecessary tax payments, maintain accurate records, and stay current with VAT obligations, supporting seamless adherence to the UAE’s tax regulations.
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What is VAT?
Value Added Tax (VAT) is a consumption tax applied at each point of sale on goods and services, with the end consumer ultimately bearing the cost. Organizations are responsible for collecting and remitting this tax on behalf of the government. In the UAE, VAT is uniformly applied to tax-registered businesses operating both on the mainland and within free zones.
Difference between Zero-rated & Exempted Tax supplies
Good and Services on which zero-rate (0%) tax rate is levied are Zero-Rated supplies. For zero-rated supplies, input tax can be recovered. Examples:
- Exports of goods and services
- First sales/rent of residential buildings
- Certain educational services and related goods and services
Good and Services on which zero-rate (0%) tax rate is levied are Zero-Rated supplies. For zero-rated supplies, input tax can be recovered. Examples:
- Financial Services like life insurance
- Local Passenger Transport
- Residential Buildings
How can VAT services help you grow your business in UAE?
VAT is not an additional burden or cost for the business. In general, every business act as a mediator for the Government. Only the effect is reflected in the cash flow. So, proper planning and effective management of tax collection and its execution will give added value and cash inflows to every business. VAT services help:
- Get updated and trained regarding the latest changes in the VAT law and its impacts on accounting.
- Maintain the books of account for five years, as per law.
- Provide guidelines for the preparation of invoices for sales.
- Maintain the books of account for five years, as per law.
- To claim the input tax paid as per the VAT law.
- To prevent errors in filing tax return.
VAT Registration Process
VAT Registration is mandatory for those businesses, whose taxable supplies and imports exceed AED 375,000 per annum. Businesses can voluntarily register for VAT if their taxable supplies and imports exceed AED 187,500 per annum. Basically, a business can opt for any of the two types of UAE VAT Registration process:
- 1. Mandatory Registration -The threshold for mandatory registration of a business is AED 375,000. But this threshold is not applicable to foreign organisations.
- 2. Voluntary Registration -The threshold for voluntary registration of a company is AED 187,500.
VAT Assessment
The businesses are liable to charge the tax to the customers based on the output and input tax.
Output tax is the VAT collected on selling goods or providing services to the clients. Input tax is the VAT paid on purchasing raw materials for the goods or services.
Hence, the formula for VAT assessment is:
VAT = Output Tax – Input Tax
Aebiaccountax VAT Services
While ignorance may seem blissful, it’s a costly mistake when it comes to VAT. Businesses that fail to adhere to VAT regulations risk facing significant penalties, impacting both their market reputation and goodwill. Alongside its premier VAT services in the UAE, Aebiaccountax provides Tax Consultancy, Implementation, and Tax Reclaim services at competitive rates. With a vast client base, Aebiaccountax is recognized as a leading platform supporting VAT compliance for both start-ups and established businesses across the Emirates. It also offers Accounting & Bookkeeping, Accounts Outsourcing, Internal Auditing, and other essential business services within the UAE.
For any VAT-related services in the UAE, feel free to reach out to Aebiaccountax. Our VAT consultants are ready to provide expert support across the Emirates.