A sharp drop in the price of oil around the world has hit energy-exporting nations, including several countries in the Middle East. Hence, these countries now have to look for alternate forms of revenue generation. In a bid to remove this budget deficit, many of them have turned to VAT regulation and taxation. As a result, VAT services in UAE have gained massive popularity recently. VAT accounting in Dubai helps companies maintain compliance with the VAT laws that help the government diversify its revenue sources and boost economic prosperity. In this article, we will take a look at VAT consultants in UAE and why VAT consultancy services in Dubai are so essential.
What is VAT Consultancy Services Dubai?
The Kingdom of Saudi Arabia was one of the first countries in the Middle East to adopt the Value Added Tax as a taxation system. Saudi Arabia implemented the VAT in January, 2018 and began to levy 5% tax on almost all goods and services. VAT Consultancy Services in Dubai help businesses manage their VAT registration, payment and feelings so that they stay compliant at all times. The Value Added Tax serves as an indirect form of taxation that is added to the value of an item at different stages of its production and distribution cycle. In the GCC, most countries have adopted a VAT tax rate of 5% on eligible goods and services.
What is the VAT refund scheme?
The GCC VAT system allows business visitors to claim VAT on different expenses incurred. This is quite similar to the VAT refund scheme that is popular in the EU. Both the FTA and the GAZT allows visitors to claim a refund on various services and items. Here is a list of services for which businesses will be able to claim a VAT refund in the KSA and the UAE.
|VAT Refund Applicability of Various Services in the UAE and Saudi Arabia|
|Sl No||Service||Saudi Arabia||UAE|
|2||Restaurant Meals||Not applicable||Not applicable|
|3||Entertainment Business||Not applicable||Not applicable|
|5||Exhibition Trade Fairs||Refundable||Refundable|
|6||Marketing||VAT exempt with Reverse Charge rules||VAT exempt with Reverse Charge rules|
|7||Consultants||VAT exempt with Reverse Charge rules||VAT exempt with Reverse Charge rules|
|8||Car Rentals||Not applicable||Not applicable|
|9||Lawyer Fees||VAT exempt with Reverse Charge rules||VAT exempt with Reverse Charge rules|
|10||Tele Communications||Restrictions apply||Not applicable|
|11||Training Courses||Refundable, VAT exempt with Reverse Charge rules||Refundable|
|12||Travel (Taxi, Public)||Not applicable||Not applicable|
|13||Transportation (Goods)||Not applicable||Not applicable|
|14||Petrol||Not applicable||Not applicable|
|15||Diesel||Not applicable||Not applicable|
What to know about the VAT Refund Scheme
- Only business entities that are registered as a Taxable Person can claim a VAT refund.
- To claim a VAT refund, the business must have all the required legal documentation in place, including the original tax invoice.
- The VAT paid must have been charged accurately and correctly.
- The minimum amount claimed must be either 2000 AED or SR, which amounts to roughly €450
- Businesses can submit a VAT refund within six months from the end of the calendar year.
- The tax authorities will verify all claims for a VAT refund to ensure they are correct and accurate.
- Businesses must file their returns through an online platform, and the form must contain the following details;
- Name and address of the company
- Nature of the business activities
- VAT registration certificate
- Description of the expenses
- Reasons for incurring the expenses
- Description of activities undertaken
- Related invoices and other evidence
What to Know About VAT Consultancy Dubai
- VAT services in UAE are certain that this new system of taxation will impact all local companies as it will lead to a change in the price of goods and services. Hence, all susceptible companies must meet with a VAT consultant in Dubai to discuss the impact and how best to handle it.
- The authorities that have been given the responsibility of managing VAT taxation and payment are the Federal Tax Authority in the UAE and the General Authority of Zakat and Tax in Saudi Arabia.
- All businesses that make more than AED or SR 375,000 must mandatorily register for the VAT. Meanwhile, companies whose annual revenue exceeds AED or SR 187,500 may opt to register for the VAT. In such cases, the companies in question must meet with a VAT consultancy UAE service.
- Suppliers who do not deal in taxable supplies can ask the government for an exception from VAT registration. This will also mean that they will not have to submit any VAT returns. However, companies must contact VAT services in UAE before making such a decision.
- All VAT-registered businesses must maintain accurate and up-to-date records of their financial transactions. These records must contain details regarding their income sources and related expenses.
- All registered businesses must submit formal reports regarding the VAT amount charged and paid to the local tax authorities. VAT consultancy services in Dubai can help companies file such reports with ease.
- Businesses that belong to the same owner and located within the same country can register as a VAT group. In such cases, the group will have to submit only one consolidated report containing details of all financial transactions. Such a group will receive a single tax number making it easy for them to maintain compliance.
VAT in Saudi Arabia :
In case a company that must mandatorily register for the VAT does not do so, they will be liable to pay the following penalties;
- In Saudi Arabia: Penalty that is double the amount of VAT payable
- In the UAE: Fine of AED 20,000.
In case a company does not maintain the records as mandated by VAT law, they will be liable to pay the following penalties;
- In Saudi Arabia: Penalty which is higher of SR 1,000 or 2% of the average monthly VAT value
- In the UAE: Fine of AED 10,000 the first time and AED 50,000 if repeated
In case a company files erroneous VAT reports, they will be liable to pay the following penalties;
- In Saudi Arabia: Penalty amounting to at least 50% of the undeclared VAT amount
- In the UAE: Fine of AED 3,000 the first time and AED 5,000 id repeated
What companies have to do
- Change their pricing strategies and adjust their profit margins accordingly with the help of VAT services in the UAE, like KGRN Chartered Accountants.
- Ensure that they meet all the required legal compliances
- Please review and update their IT system to ensure they meet and maintain VAT compliance.
- Train and ensure all your staff are well versed in VAT laws
- Please register for the VAT and ensure they file the required reports and invoices on time
KGRN Chartered Accountants provides one of the best VAT Services in UAE and can help you accomplish all this and more. So, partner with us and leave your VAT-related woes behind!