- What is VAT?
VAT refers to Value Added Tax & it is an indirect tax. VAT is imposed on goods & services when they are bought & sold. As a business owner, if you are buying & selling goods that are VAT supplies, you have to keep in track of them. VAT is getting implemented in UAE from 7AM of Jan 1st, 2018
- What are the taxable & non-taxable items under VAT?
The supply of goods & services are classified into 3 types.
Dining out, smartphones, electronics, watches etc.,
Supply of preventive & basic healthcare services, Residential properties, Bare land and Local passenger transport
Exports from the UAE to outside the GCC countries, Supply of crude oil and natural gas, Supply of goods & services to educational services owned or funded by federal or local government
- What is the tax structure for VAT?
As of now all the taxable items have a single tax structure of 5%.
- I am already running a retail business in UAE, what would be the impact of VAT?
If you are selling any taxable supplies like smartphones, electronics, watches, packaged foods, beverages or having a dining out restaurant you have to now start collecting VAT from your customers
For all purchases related to your supplies and for electricity bills, water bills and building rents you have to pay VAT to your suppliers
- What is the difference between exempt supplies and zero-rated supplies?
If you are supplying goods or services that are subject to a zero rate, you have to register for VAT & file returns, but can get the VAT credit which was incurred on their purchases. Meanwhile, businesses that supply exempt goods or services cannot recover the VAT they incurred on their purchases.
- Are there specific dates for businesses to register for VAT?
All businesses must register for VAT before 4th December, 2017. Businesses registering after Dec 4th would be subjected to penalities as defined by the Tax laws of UAE
- How will I be able to register for VAT?
- What is the registration limit for businesses under VAT?
If the taxable supplies of your business exceeds AED 375,000 you must register for VAT. If you are a startup business and had no turnover yet, you can choose to register for VAT voluntarily. However, the minimum threshold of AED 187,500
- Can I begin charging VAT before January 1, 2018?
Businesses cannot collect VAT on any goods or services before January 1, 2018. If you wish to experience how your business operate after Jan 1st, GOFRUGAL can help you simulate the entire process with GOFRUGAL Practice mode
- What are the records that need to be retained?
All registered & unregistered businesses must retain records such as balance sheet, profit & loss, payroll, inventory and stock levels, all accounting records like payments, receipts, purchases, sales, revenues and expenses for 5 years