Value Added Tax (VAT) is a consumption tax that is applied to goods and services at each stage of the supply chain in the UAE. Introduced on January 1, 2018, VAT is part of the government’s efforts to diversify its revenue sources and reduce dependence on oil.

What is VAT?

VAT is a tax levied on the value added to goods and services at each stage of production or distribution. Businesses collect VAT from customers and pay it to the Federal Tax Authority (FTA), contributing to the country’s overall tax revenue.

When Should a Company Register for VAT?

A company must register for VAT if:

• Its taxable supplies and imports exceed AED 375,000 annually.
• It voluntarily wishes to register, even if its taxable supplies are below the threshold (between AED 187,500 and AED 375,000).

What are the VAT Rates?

The standard VAT rate in the UAE is 5%. However, certain goods and services are zero-rated (0% VAT), including:

• Exports of goods and services.
• Certain healthcare services.
• Education services.

Additionally, some goods are exempt from VAT altogether, such as certain financial services and residential property rentals.

How to Register for VAT

To register for VAT, a company must:

Visit the FTA’s official website.
Create an account in the FTA’s e-Services portal.
Complete the VAT registration application, providing necessary documentation (e.g., trade license, Emirates ID).
Submit the application for approval.

How to File for VAT Return

Filing a VAT return is essential for compliance. Here’s how to do it:

1. Prepare your records: Keep detailed accounts of your sales and purchases.
2. Log into the FTA portal: Use your registered account to access the e-Services.
3. Complete the VAT return form: Report your total sales, purchases, and the amount of VAT collected and paid.
4. Submit the return: Ensure all information is accurate and submit before the deadline.

When to File

VAT returns must be filed quarterly, and the due date is usually 28 days after the end of the tax period. For instance, for the January-March quarter, the return is due by April 28.

Conclusion

Understanding VAT in the UAE is crucial for businesses to ensure compliance and avoid penalties. By registering for VAT, filing returns accurately, and staying informed about VAT rates and regulations, companies can effectively navigate this important aspect of doing business in the UAE.

At Kaidzen Biz, we are here to guide and assist you in ensuring that your business remains compliant with all VAT requirements. Our experienced team can help you navigate the complexities of VAT

Got questions? Reach out to our team – we’re here to help!