Though introduced only recently in UAE, imposing VAT has been in practice in numerous countries across the world. The VAT is an acronym for Value Added Tax. The businesses on which this tax is applicable (VAT registered businesses or taxable persons) shall collect the Tax on behalf of the government and shall be liable to pay the government the same by filing a VAT return with the Federal Tax Authority. Basically, it will be consumers who bear the tax in for of a 5% addition to the goods or service that they buy.

For those who are new to the concept of VAT and are wondering about it, this article should guide you through most of your doubts. In case you have any further doubts about VAT, you can always visit VAT consultancy services in UAE like Finacctech. Most of the top accounting and financial consultancy firms in UAE provide VAT consultancy. UAE enterprises, in fact, being new to Value Added Tax, are suggested to contract a consultancy to ensure proper and timely compliance with the law.

Payable VAT rate and application

The VAT rate payable is at 5 percent. The actually VAT amount that a taxable person shall be liable for will be the difference between the output tax (the amount charged as VAT on the supplies or services) and the input tax (VAT paid on purchasing the inputs). Thus, you can recover the input tax for that specific period by filing with FTA. In case your input tax exceeds the output tax, the amount can be reclaimed by setting the amount off in the subsequent filings.

VAT shall be applicable to all the tax-registered businesses. All the businesses are supposed to pay VAT irrespective of whether or not they are in the free Zone or UAE mainland. The only possible exception is ‘designated zones’ as defined by the UAE cabinet. You can check out the list of designated zones to know about them.

How and where can you file a VAT return?

You can easily file VAT returns on the online portal of the Federal Tax Authority, which is eservices.tax.gov.ae.  To register the business for VAT, go to the eServices option of the FAT website. Before and while you file returns with Federal Tax Authority, it is important that you ensure you have met all the formalities and have filled it right. There are multiple rules and laws involved in tax filing processes. In case you feel overwhelmed, you can simply consult and contract with a VAT consultancy in Dubai or anywhere in UAE. They can easily take the burden off your shoulders!

What if you accidentally skip or make mistakes while filing tax returns?

Legislation in relation to VAT does offer opportunities for taxable persons to rectify any errors made by them or anything in case filing return has been skipped. Depending on the situation, the taxpayer can opt for a Reconsideration form or Voluntary disclosure.

Documents or records that businesses need to keep for a VAT or any other Tax audit

• All of the tax invoices and records, or credit notes or other documents for the receipt or supply of goods and services.
• Records in relation to the disposed or withdrawn goods and services but whose tax has been paid.
• The details of goods bought by the business for which the there was no deduction made of the input tax.
• Details of any exports or imports made by the business
• Records of any corrections or adjustments made to the tax records or accounts.

This list covers most of the documents required. But, authorities are in a position to demand any further clarification or documents to satisfy the legal requirements.

Why do you need to hire a VAT consultancy service in UAE?

Well, there are several obvious reasons as to why you should hire a VAT consultancy in Dubai or other parts of the UAE. Not sure yet? Read on the following points. They might give you some insight and much-needed perspective.

• Guidance and support: By being associated with a VAT consultancy service in the Middle-East, you will be having someone reliable behind you to guide you through tax-related requirements.
• New VAT law: Given that VAT is only recently introduced in UAE, there is a possibility that you have less understanding of VAT, the rules, procedures, and laws involved with it. However, consultancy professions being of this field, stay updated about all the latest changes and requirements by the law. So, hiring a professional VAT consultancy would be a good idea to have your returns filed right.
• Forgetting the worries: Filing VAT on time, charging the right amount of VAT, ensuring the return filing in the required manner and format, all of this might use up some part of your precious time. By outsourcing it to a VAT consultancy, Dubai businessmen can invest all their time in more important and pressing tasks.
• Compliance with the laws: In case businesses happen to fail to file the return on timely or appropriately, or make severe mistakes, it can ultimately invite some serious legal consequences. This situation can be in control if you have professionals to timely handle the VAT and other tax-related formalities. There would be no way that a VAT consultancy service in UAE or a finance handling would forget the filing date or make an error in the formalities.
• Reports and implication: You will no more have to tax your brain thinking of and trying to figure out the implications of various taxes, about the audit reports or anything related. You will have professionals at your service who shall be responsible for analyzing the legal environment, both domestically and internationally and presenting its implications before you as required.