Things you should know about VAT in the UAE..

Value Added Tax (VAT) is due to be implemented in the UAE in January 2018.VAT is an indirect tax, applies to the supply of goods and services. VAT is levied at each stage in the supply chain and is collected by registered business on behalf of the government.Businesses and individuals engaged in any business activity whose turnover exceeds the mandatory VAT registration threshold must register for VAT.

Furthermore, a business may choose to register for VAT voluntarily if their supplies and imports are less than the mandatory registration threshold, but exceed the voluntary registration threshold.Similarly, a business may register voluntarily if their expenses exceed the voluntary registration threshold. This latter opportunity to register voluntarily is designed to enable start-up businesses with no turnover to register for VAT.The standard rate of the VAT is expected to be 5%. In addition, certain goods and services could be subject to VAT at a rate of 0%, and other goods and services could be exempted from the VAT.

VAT Related Responsibilities of Businesses.

All businesses in the UAE will need to record their financial transactions and ensure that their financial records are accurate and up to date. Businesses that do not think that they should be VAT registered should maintain their financial records in any event, in the case to establish whether they should be registered.

VAT-registered businesses generally:must charge VAT on taxable goods or services they supply;may reclaim any VAT they’ve paid on business-related goods or services;keep a range of business records which will allow the government to check that they have got things right

How will the Government collect VAT – Important dates?

Businesses will be responsible for carefully documenting their business income and 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. VAT will come into force on 1 January 2018. Any business that is required to be registered for VAT and charge VAT from 1 January 2018 must be registered prior to that date. Taxpayers must file VAT returns with the FTA on a regular basis (quarterly or for a shorter period, should the FTA decide so) within 28 days from the end of the tax period in accordance with the procedures specified in the VAT legislation The Tax returns shall be filed online using e-Services.