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VAT Registration and VAT Consultancy

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VAT - VALUE ADDED TAX

The value added tax or VAT is an indirect tax applied to sold products and services, which is why it could be regarded as a consumption tax. VAT is considered an indirect tax because it applies to the final consumer that purchases the product or the service VAT were applied to. There will be issues for the companies selling goods or services as they will be the ones collecting the tax and returning it to the government, while for the population of Dubai

VAT will mean higher prices for certain categories of goods and services that were not subject to any taxes. Dubai companies registered for VAT will impose and collect the tax from the final consumer and will pay it to the government. For this purpose, businesses must file VAT returns which will enable them to recover the amount paid as a VAT. It is useful to know that foreign companies registered for VAT in Dubai can also claim refunds here. If you want to open a company in Dubai, you can opt for VAT registration from the beginning and our DED registration advisors can help you.

The implementation of VAT in UAE

The UAE Government implements regulatory mechanisms and frameworks on a periodic basis, across Government departments and realms, as part of its key initiatives to boost economic health. One such significant implementation was the introduction of VAT (Value Added Tax) in the UAE, declared the representatives of our company who help businessmen open companies in Dubai. In 2018, Value Added Tax (VAT) was implemented in the GCC (Gulf Cooperation Council), with key economies like the Kingdom of Saudi Arabia and the United Arab Emirates adopting and implementing the regulatory framework.

For businesses, this meant levying VAT on their goods and services, at each transactional stage from raw materials to finished products. The entire framework of VAT taxation is an attempt to streamline macro and micro financial compliance across all businesses based anywhere in UAE. The government deserves credit for smooth VAT implementation and it is evident from the overall compliance rate which is above 90% across all UAE businesses.

We will undertake a forensic review of every business area likely to be impacted by the VAT regulations to ensure that the operations and processes are fully in compliance. The format of documents and wording on contracts may have to be revised, and some businesses may need to re-evaluate current pricing strategies to accommodate the impact of VAT. It is also essential to identify whether a firm’s current accounting system has the capacity to process various types of output and input VAT, as well as to generate VAT return files and FTA Audit files in the approved formats. Businesses will also have to assess the effect of VAT on their cash flow and identify ways to minimise any negative impact. We can assist clients to address all these issues.

VAT Registration in Dubai

The VAT law sets out mandatory and voluntary VAT registration thresholds. It is essential to determine which activities of the business are considered to be taxable supplies for VAT registration purposes. It is also important to ensure that a company gets registered for VAT within the specified deadline to avoid penalties for late registration. The VAT registration process requires a number of documents to be submitted to the Federal Tax Authority (FTA). Uploading insufficient or incorrect documents can delay the approval process significantly. Furthermore, some sections of the application need to be completed in Arabic.

Our team has prepared a simple checklist of all such documents and can provide samples of the various formats required by the FTA. We only submit an application after we have thoroughly reviewed all the documentation. This will help to ensure a swift and straightforward VAT registration.

Who is Required to Register for VAT in Dubai?

The VAT is a relatively new tax, however, the government has made important progress in clarifying and helping those who need to register for this tax in the Emirate. VAT registration is optional for new companies, however, it can become mandatory under specific conditions.

  • natural persons and companies making VAT-taxable supplies in Dubai can register voluntarily for VAT
  • natural persons and legal entities importing goods subject to the VAT in Dubai can also register optionally for VAT
  • Foreign companies selling VAT-taxable goods and services in Dubai are required to register for this tax.
  • Any Business owner whose yearly income exceeds 375,000 required to fill their VAT enlistment online applications.
  • If your taxable turnover is less than AED 375,000, but more than AED 187,500, you can register for VAT voluntarily.
  • However, there are certain supplies such as healthcare and education services, financial services, insurance, sale and lease of residential property and domestic public transportation is either zero-rated or exempt for VAT in UAE.

Not all companies supplying goods and services must register for VAT, but only those registering income above the 375,000 AED. Also, VAT registration is voluntary for companies with incomes below 187,500 AED. The main advantage of VAT registration is that companies can be refunded for the amount paid from the collection of the new tax following the submission of the tax returns. VAT returns will be filed electronically at the end of the taxable period or on a quarterly basis.

The taxable periods are:

  • Monthly for companies with an annual income of 150 million AED or more;
  • Quarterly for companies with an annual income below 150 million AED.

It should be noted that non-resident companies or individuals with economic activities in the UAE are also required to register for VAT here. All VAT invoices must be kept for a period of 5 years by all VAT taxpayers.

Requirements for VAT Registration in Dubai?

One of the most important requisites to meet when applying for a VAT number in Dubai is to have a tax identification number. This is obtained together with the Certificate of Incorporation and is issued by the Trade Register in Dubai Based on the tax identification number, a company will be issued a VAT certificate. There are several documents that need to be prepared when registering for VAT in Dubai. Among these are:

  • the company’s business license (copy after the trade or commercial license)
  • copies after the passport of the owner and other shareholders in the case of companies
  • the Memorandum and Articles of Association of the company
  • information about the representative of the company and contact information
  • proof of the registered address of the company in the UAE
  • information about the corporate bank account (IBAN included)
  • an income statement for the last 12 months (where available)
  • an estimation of the expected revenue, turnover and expenses for the following 30 days after VAT registration
  • information about the import-export activities of the company (where applicable)
  • the company’s customs code and copy of the Dubai Custom Code Certificate (where available)
  • information about the Gulf Cooperation Council countries in which the company trades;
  • a detailed description of the company’s business experience for the last 5 years (where available)
  • information on whether the company will be part of a tax group
  • Copies after the identification papers with the necessary visas in the case of natural persons.

VAT Consultancy

This is the most important aspect of our service. It gives us the opportunity to fully understand the day-to-day operations of a client’s business, the type and volume of supplies they make, their VAT inputs and outputs, the applicability of reduced rates and exemptions, and their record-keeping capacity. This enables us to assess how VAT applies to their business and identify the changes that are required to their existing accounting systems and business processes. Once the consultancy is completed, the next step is to assess the need of VAT in your business structure and then put forward the ways of its implementation. We are a team of Value Added Tax (VAT) experts who will assess your budgets, financial performance and business position. On the basis of thorough assessment, a perfect accounting and taxation system for the calculation, recording and updating of VAT will be suggested.

We are provident for completing your business and corporate documentation as advised in the consultancy phase. The implementation stage ensures the client that accurate bookkeeping will be conducted using cloud computing. The effectiveness of VAT is guaranteed with accuracy in the records of accounts receivable and accounts payable that will be most likely to affect the new start-ups and existing business.

VAT-compliant Bookkeeping

Many of our clients outsource their entire accounting function to our team. We ensure that clients’ books of accounts are updated in a timely manner and all sales, purchases and expense transactions are recorded in full compliance with VAT regulations. We will also prepare the invoices and credit notes as per FTA-approved formats. It is essential to charge the correct VAT amount on each relevant supply and it is equally important to claim input VAT only on permitted transactions under the VAT legislation. Errors in this respect may attract unexpected penalties in future. We also include the preparation of financial accounts on a monthly basis, which assists our clients to stay up-to-date with their business performance and financial position.

VAT Returns

VAT returns must be filed on a monthly or quarterly basis, depending upon the size of the business. There are specific deadlines for these returns and incremental penalties are applicable for default. These filings involve a declaration of standard-rated supplies, zero- rated supplies, exempt supplies, reverse charge transactions, imports and relevant taxes. A well-maintained accounting system and process is essential to produce the correct figures with ease at the right time. We can assist clients with the correct and timely filing of VAT returns, and can also provide guidance with the process of settlement for amounts due.

VAT Recovery

Businesses whose input VAT exceeds their output VAT for the period, are entitled to seek reimbursement from the FTA. The FTA may request an explanation or further supporting documents before processing the refund. We can liaise with the FTA on behalf of clients on all tax related matters. Sovereign can respond to FTA queries, submit requests for reconsideration of FTA decisions, and assist clients with any tax audits conducted by FTA.

Accounting and Bookkeeping Services in Dubai

Accounting and bookkeeping services in Dubai are required by all the companies regardless of the size of the company as the government of UAE makes it mandatory to maintain a systematic and comprehensive recording of all the financial transactions of the company. Accounting and bookkeeping helps in preparing a well analysed and accurate financial documents such as balance sheets, trial balance, profit or loss statements by recording and classifying all the financial data of the transactions. Accounting and Bookkeeping helps the management of the company to understand and monitor the movement of the money before making any financial decision. It is compulsory from the Government of UAE to maintain the books and accounts of the company for a minimum of 5 years.

Requirements :

We require the following documents to assist with our due diligence procedures:

  • Business license and registration information
  • Passport copy, visa copy and proof of address of the Manager on the license
  • Cash receipts and deposit slips
  • Cash disbursements and bank statements
  • Supplier invoices received
  • Details of Sales Invoices raised
  • Copies of purchase or lease contracts and loan agreements
  • Copies of contracts or agreements with customers
  • Documents to our office address and we can remotely complete the accounting work for you.
  • Detailed list of company assets (description, date of acquisition, original cost and current value)
  • Other documents necessary for correct account reporting

Give Access to Expert Knowledge: We will guide you

Company’s financial position can be identified by the way they are handling their accounts and finances. A minor mistake in the accounts and taxes can create complications and distort the functions of the company. Our approach and quality accounting services in Dubai assists businesses in improving the management, oversight, and control of their accounting, tax, and cash flow processes through a flexible mix of in-house and external resources. Our experienced accounts specialists are capable of analysing and reviewing complex financial and accounting reports.

Hiring a dedicated accountant in UAE comes with various obligations and costs related to monthly salary, annual air tickets, visa, Emirates ID & labour contract fees, mandatory medical insurance, gratuity provisions, annual leaves, training costs and overtime costs. Our fixed monthly fees tailored as per your requirement will be far more affordable than the total cost of hiring an in-house accountant.

We have a team of professionally qualified accountants with vast experience in diverse industries. Instead of relying on an individual in-house staff, you will get access to the pool of expert accounting knowledge and experience of our team. We help companies to discover that unique approach by assessing operational efficiencies, identifying opportunities to enhance strategic insight and operational effectiveness, and developing a path of improvement by leveraging alternative resource models. We have experienced and professional chartered accountants in Dubai who aim to look into the broad picture of the client’s business despite the size and complexity of the figures.

Our bookkeeping services will include the followings:

  • Recording of all business transactions
  • All business transactions shall include all income and expenses, receipts and payments and all other adjustments.
  • Posting of general ledger and other ledgers as necessary
  • Reconciliation of bank statements and passing any necessary adjustments
  • Accounting reconciliations
  • Preparing and generating Sales invoices
  • Vendor bills and payments

Financial Statement Preparation in the UAE:

A financial statement is a formal record of the financial activities of a business. It shows the financial position (Assets, liabilities and Shareholders ‘equity) and financial performance (Profit or loss) of a company. It not only enables the internal users or management in making decisions regarding future planning but also assists external users such as banks or vendors in making decisions about the company’s borrowing capacity. We provide you with a complete set of financial statements which includes the following:

  • Statement of Financial Position ( Balance Sheet)
  • Statement of Comprehensive Income ( Income Statement or Profit and Loss Statement)
  • Cash flow Statement

UAE Audit

An audit of financial statements is the objective independent verification of the financial statements, which increases the value and credibility of the financial statements produced by the management. Our team with various local and international reputable audit firms assists in matching you with the audit company based on your requirement and budget. We also provide the full support during the audit of the company by liaising with the Auditors, preparing the schedules and confirmation letters for auditors and attending to the queries of auditors.

Tax Compliance Services in Dubai:

We also assist in completion and submission of annual accounts and annual tax returns.

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