UAE recently passed a federal decree-law setting the corporation tax rate at 9 percent for businesses with taxable income over AED370,000. The new law took effect for fiscal years beginning on June 1, 2023, as announced in December 2022. The “Corporate Tax Law” is Federal Decree-Law No. 47 of 2022 on Taxation of Corporations and Businesses. Beginning with their first fiscal year that begins on or after 1 June 2023, businesses will be liable to UAE Corporate Tax (“Corporate Tax”).
For financial years beginning on or after 1 June 2023, the Corporate Tax Law serves as the legal foundation for the adoption and execution of a Federal Corporate Tax (“Corporate Tax”) in the UAE.
The implementation of Corporate Tax UAE is meant to hasten the UAE’s development and transition while also assisting it in achieving its strategic goals. The UAE will solidify its position as a top jurisdiction for business and investment thanks to the certainty of a competitive corporate tax structure that complies with international standards and its wide network of double tax treaties.
The UAE Corporate Tax regime draws from best practices globally and incorporates concepts that are widely recognized and accepted due to the UAE’s status as a hub for global commerce and finance. This guarantees that the UAE Corporate Tax regime will be transparent in its ramifications and easy to understand.
What is Corporate Tax?
The net income of corporations and other businesses is subject to corporate tax, a type of direct tax. In certain other jurisdictions, the term “corporate tax” is also used to refer to “corporate income tax” or “business profits tax.”
Who is subject to Corporate Tax?
According to a Cabinet Decision to be issued in due course, natural persons (individuals) who conduct a Business or Business Activity in the UAE, UAE companies and other juridical persons that are incorporated or effectively managed and controlled in the UAE, and non-resident juridical persons (foreign legal entities) that have a Permanent Establishment in the UAE are all considered “Taxable Persons” for the purposes of the Corporate Tax.
Legal entities established in a UAE Free Zone are also considered “Taxable Persons” for purposes of corporate tax and are therefore subject to the regulations outlined in the corporate tax law. However, a Qualifying Free Zone Person who satisfies the requirements can gain advantages. Withholding Tax (at a rate of 0%) may apply to non-residents who do not have a permanent establishment in the UAE or who receive income from the UAE that is unrelated to their permanent establishment.
A type of corporate tax known as withholding tax is taken out at the source by the payer on behalf of the income recipient. The payment of dividends, interest, royalties, and other types of income across international borders is frequently subject to withholding taxes, which are present in many tax systems.
Who is exempt from Corporate Tax?
Given their significance and contribution to the social fabric and economy of the UAE, several types of companies or organizations are exempt from corporate tax.
These are referred to as Exempt Persons and consist of: Government Entities, Government Controlled Entities that are listed in a Cabinet Decision, Extractive Businesses, and Non-Extractive Natural Resource Businesses may all be exempt from being subject to Corporate Tax in addition to being exempt from any registration, filing, and other compliance requirements imposed by the Corporate Tax Law, unless they engage in activities that are subject to the charge of Corporate Tax.
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How is a Taxable Person subject to Corporate Tax?
The Corporate Tax Law levies income on a residency and source basis, similar to the tax systems in most other nations. The classification of the Taxable Person determines the applicable basis of taxation. Income from both domestic and international sources is taxed on a “Resident Person” basis (i.e. based on residence).
Only income obtained from sources located within the United Arab Emirates will be taxed on a “Non-Resident Person” basis. For corporate tax purposes, residence is defined by a number of particular elements that are outlined in the Corporate Tax Law rather than by a person’s place of residence or domicile.
A person will not be a taxable person and thus not be liable for corporate tax if they do not meet the requirements to be either a resident or a non-resident.
Resident Persons, Non-Resident Persons, and Permanent Establishment
Who is resident
For the purposes of corporate tax, all businesses and other juridical entities that are incorporated, otherwise created, or recognized under UAE law are immediately regarded as resident people. This includes legal entities established in the UAE in accordance with applicable Free Zone laws or mainland legislation, as well as legal entities established under a particular statute (such as a special decree).
When efficiently managed and controlled in the UAE, foreign corporations and other juridical entities may also be recognized as resident people for corporate tax reasons.
This will be decided based on the particulars of the firm and its operations, with the location of key management and business decisions being a deciding factor. Only insofar as such income is earned from a Business or Business Activity performed by the natural person in the UAE would it be subject to Corporate Tax as a “Resident Person” on revenue from both domestic and foreign sources. A natural person’s other income would not fall under the purview of corporate tax.
Who is a Non-Resident Person?
Non-resident persons are legal individuals who are neither residents nor have a permanent establishment in the UAE, nor do they get income from the state. On Taxable Income attributable to their Permanent Establishment (as is described in Section 8), Non-Resident Persons shall be subject to Corporate Tax. Certain non-residents’ income from the UAE that is not traceable to a permanent establishment there will be subject to 0% withholding tax.
What is a Permanent Establishment?
A crucial premise of international tax law that is applied in corporation tax systems all over the world is the idea of a permanent establishment. In order to evaluate whether and when a foreign person has established sufficient presence in the UAE to justify the business earnings of that foreign person being subject to Corporate Tax, the Permanent Establishment concept is central to the UAE Corporate Tax Law.
The OECD Model Tax Convention on Income and Capital’s Article 5 definition, as well as the UAE’s stance under the Multilateral Instrument to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting, served as the foundation for the definition of Permanent Establishment in the Corporate Tax Law.
This enables international individuals to determine whether they have a Permanent Establishment in the UAE or not by using the pertinent Commentary of Article 5 of the OECD Model Tax Convention. The terms of any bilateral tax agreements between the UAE and the nation where the non-resident person resides should be taken into account in this assessment.
Taxable Income and Tax calculation
What is Corporate Tax imposed on?
A taxable person must pay corporate tax on any taxable income they receive during a tax period. Corporate Tax would typically be levied once a year, with the Taxable Person determining their own burden through self-assessment.
This indicates that the Taxable Person files a Corporate Tax Return with the Federal Tax Authority in order to calculate and pay the Corporate tax UAE. The accounting income (i.e., net profit or loss before tax) of the Taxable Person as reported in their financial accounts serves as the basis for computing Taxable Income.
To determine their Taxable Income for the applicable Tax Period, the Taxable Person will then need to make a few modifications. For instance, it could be necessary to make adjustments to accounting income for revenue that is exempt from corporate tax and for expenses that are entirely or partially non-deductible for corporate tax reasons.
What income is exempt?
Additionally, the Corporate Tax Law exempts some forms of revenue from the Corporate Tax. As a result, a Taxable Person will not be charged Corporate Tax on such revenue and cannot deduct any expenses that are connected to it.
Taxable individuals who receive exempt income continue to be liable for paying corporate tax on their taxable income. The fundamental goal of exempting some income from corporate tax is to avoid taxing some forms of income twice.
Particularly, corporate tax will typically not be applied to dividends and capital gains derived from local and overseas shareholdings. In addition, for the purposes of UAE Corporate Tax, a Resident Person may choose, under certain circumstances, to exclude income from a foreign Permanent Establishment.
What expenses are deductible?
The timing of the deduction may vary depending on the type of expense and the chosen accounting system, but in general, any legitimate business expenses made entirely and exclusively for the purpose of generating Taxable Income will be deductible.
For capital assets, expenses are typically recorded through depreciation or amortization deductions throughout the course of the asset’s or benefit’s economic life.
Dual-purpose expenses, such as those incurred for both personal and company needs, must be allocated, with the appropriate portion being recognized as deductible if it was incurred completely and solely for the taxable person’s business. For corporate tax purposes, some expenses that are deductible under normal accounting principles might not be entirely deductible.
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What is the Corporate Tax rate?
If your taxable income is more than AED 375,000, corporate tax will be charged at a headline rate of 9%. A 0% corporate tax rate will apply to Taxable Income below this cap.
What is the Withholding Tax rate?
Some types of income from the UAE paid to non-residents may be subject to a 0% withholding tax. Due to the 0% rate, in effect, neither UAE enterprises nor international beneficiaries of income from the UAE would be required to register or file any withholding tax-related documents. Transactions between UAE residents are exempt from withholding tax.
When can a Free Zone Person be a Qualifying Free Zone Person?
For “Qualifying Income” only, a Free Zone Person who qualifies for the benefit may receive a special Corporate Tax UAE rate of 0%. The following requirements must be met by a free zone person in order to qualify as one: maintain sufficient substance in the UAE; obtain ‘Qualifying Income’; not have made an election to be subject to Corporate Tax at the regular rates; and comply with the transfer pricing rules under the Corporate Tax Law.
A Qualifying Free Zone Person may be required to comply with extra requirements set forth by the Minister. The standard rates will apply if a Qualifying Free Zone Person fails to comply with any of the requirements or elects to be subject to the regular Corporate Tax regime.
What are Tax Groups, and when can they be formed?
If two or more Taxable Persons meet the requirements (see below), they may apply to form a “Tax Group” and receive the same treatment as one Taxable Person for the purposes of Corporate Tax.
The main firm and all of its subsidiaries must be resident juridical entities, share the same financial year, and compile their financial statements in accordance with the same accounting rules in order to constitute a Tax Group.
In order to create a Tax Group, the parent firm must additionally: possess at least 95% of the subsidiary’s share capital, at least 95% of the voting rights within the subsidiary, and at least 95% of the profits and net assets of the subsidiary. Ownership, entitlement, and rights may be held directly or indirectly through subsidiaries, but a tax must be paid.
How to Calculate the Taxable Income of a Tax Group?
The parent firm must prepare consolidated financial accounts for each subsidiary that is a member of the Tax Group for the applicable Tax Period in order to determine the Taxable Income of a Tax Group. For the purpose of figuring out the Taxable Income of the Tax Group, transactions between each group member and the parent firm as well as between the group members would be deleted.
Registering, filing, and paying Corporate Tax
It will be necessary for all Taxable Persons to register for Corporate Tax and get a Corporate Tax Registration Number, including Free Zone Persons. Some Exempt Persons may also be asked by the Federal Tax Authority to register for Corporate Tax.
For each Tax Period, Taxable Persons must submit a Corporate Tax return within nine months after the conclusion of the applicable period. The payment of any Corporate Tax owed in relation to the Tax Period for which a return is submitted would typically have to be made by the same deadline. The registration, filing, and payment dates applicable to Taxable Persons with a Tax Period (Financial Year) ending on May 31 or December 31 (respectively) are illustrated here.
How to Prepare for Corporate Tax?
Read the Corporate Tax UAE Law and the supplementary materials on the websites of the Federal Tax Authority and the Ministry of Finance. Determine if your company will be liable to corporate tax and, if so, from what date, using the information at your disposal.
Recognize the requirements for your company under the Corporate Tax Law, such as:
a. Whether and when your company needs to register for Corporate Tax;
b. What is the accounting or tax period for your company;
c. When your company would need to file a Corporate Tax return;
d. What elections or applications your company may or should make for Corporate Tax purposes; and
e. What financial data and records your company will need to keep for Corporate Tax purposes.
What is Business activity
According to the definitions of “Business” and “Business Activity” in the Corporate Tax Law, it is determined whether a person is a taxable person when their actions result in a UAE CT obligation. Any ongoing or transient economic activity is referred to as a “business” and can be carried out by anyone. It is implied that a business is operated with the goal of making a profit and that the activity is organized and follows some sort of system.
A business or commercial activity, however, does not lose its identity for UAE CT purposes just because it is not profitable. A person is deemed to be a taxable person if their actions result in a UAE CT obligation in accordance with the definitions of “Business” and “Business Activity” in the Corporate Tax Law.
A “business” is any continuing or sporadic economic activity that is conducted by any individual. It is implied that a business is run with the intention of turning a profit and that the operation is planned out and adheres to a set of rules. However, just because a firm or commercial activity isn’t lucrative doesn’t mean it loses its identity for UAE CT purposes.
Are international companies’ UAE branches subject to UAE CT?
The UAE CT payable on the income of the foreign branch or permanent establishment may be reduced by the corporate tax (or similar tax) paid on the pertinent income in the foreign jurisdiction in cases where no election is made or the foreign branch or permanent establishment’s income is not eligible for an exemption from CT.
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The information provided herein is for the general information of the user and is provided in good faith. We make no representation or provide warranty of any kind, express or implied, regarding the adequacy, suitability, validity, or completeness of the information. Our advice in regard to UAE corporate tax and value added tax is based on our understanding of the relevant laws and the regulations issued. We cannot be held responsible for new regulations and/or interpretation of existing regulations by the FTA that is not consistent with our advice. Under no circumstance shall we have any liability to any user of this information or to third parties for any loss or damage of any kind incurred as a result of the use or reliance of this information.
Running multiple businesses at once is undoubtedly a daunting task, and it can be quite difficult to juggle at the same time. But every problem has its own solution.
Beaufort Associates Accounting services in Dubai can help entrepreneurs dealing with multiple businesses simultaneously with financial complexities.
Different businesses require an equally diverse set of skills to run, and a complex approach to ensuring the growth of an enterprise requires a lot of hard work and expertise.
The financial complications of managing different businesses simultaneously can weigh heavily on you.
That is why traders often face various challenges in business-related matters for which Dubai accounting services can solve your problem. It works to deal with your financial complexities as per your business requirements.
So in this article, we will see how Dubai accounting services can help in handling different businesses simultaneously.
Understanding Dubai’s Thriving Business Landscape:
Dubai is a well-known place worldwide for its business facilities and infrastructure which has helped to establish itself as a leading business hub due to its strategic location.
With world-class facilities, excellent transportation and excellent infrastructure, it is an attractive destination for businessmen from all over the world.
Dubai offers you a wide variety of business opportunities in different sectors.
With finance, entrepreneurs can explore opportunities in various sectors including technology and tourism.
Dubai’s business regulatory environment is considered business-friendly for entrepreneurs.
The government introduces attractive policies that attract foreign investment.
Dubai is an attractive place for businessmen due to its excellent facilities, with numerous opportunities for investment from finance to tourism, which are attractive due to the government’s business-friendly policies.
Managing Multiple Businesses’ Finances
There are several important aspects of managing the finances of multiple businesses, such as:- Consolidation of Financial Statements: This process involves combining the financial statements of separate businesses – independent legal etities and/or branches – into one comprehensive and single statement. A consolidated financial statement helps in providing an overview of the overall performance of the business.
- Tax Planning and Compliance: Corporate Tax law allows treating commonly owned companies to be grouped together for tax purposes under certain conditions. Such grouping has several advantages and also certain disadvantages. It is important to carefully consider the financial position and the tax exposures of the individual companies to decide how and when to opt for grouping of companies. This aspect requires thorough knowledge and management of taxes and a knowledgeable outsourced service provider can assist in developing and implementing a meaningful strategy.
- Cash Flow Management/Problems: Effective cash flow management is very important while dealing with multiple businesses simultaneously and efficiently. This includes planning for the future taking into account inflows and outflows and implementing the best policies to improve liquidity while managing risks.
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The Importance of Accounts Data Security
The importance of account data security in financial management cannot be overemphasized, and it is very important to keep a few things in mind for its better management, including:
Security of financial information: To prevent financial losses, it is very important for you to consider the security of accounting data from unauthorized access, fraud. This includes controlling and implementing strict and robust security measures to protect sensitive financial information.
Complying with data privacy laws: Whether a business is one or multiple, compliance with data privacy laws and regulations is critical to ensure the sensitivity and integrity of business accounting data.
Challenges and Solutions
Managing multiple businesses simultaneously can be a daunting and exhausting task, especially when dealing with financial complexities and complex regulatory changes.
Beaufort’s trained and experienced team (professionals with expertise in regulatory affairs and complex financial management) is available to assist in managing and operating multiple businesses optimally.
Our Accounting services in Dubai will engage with you to develop an excellent solution to efficiently deal with your concerns.
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Benefits of Outsourcing Accounting Services
Your company’s operations can be improved and earnings can be increased by outsourcing your accounting services.
However, some companies are still hesitant to cede control over such a crucial area of their operations.
Actually, there are many advantages to outsourcing, from cost savings to better financial reporting.
Case Study & Success Story
Beaufort Associates: 20 Years of Assisting and empowering several clients.
Over a decade ago Beaufort was approached to assist the Dubai subsidiary of a European multinational company in providing accounting services.
We communicated with the local and the head office management to define data sharing protocols, deadlines and financial information deliverable requirements.
Beaufort scales it services over time as the activities and the revenue of the subsidiary grew and took responsibility for several aspects of financial managements including accounting, audit support, VAT planning and compliance.
In so doing, Beaufort Associates has had the privilege of contributing to their incredible growth journey.
Beaufort Associates has played an integral role in ensuring their financial stability, offering tailored accounting solutions and expert advice.
This long standing partnership is a testament to the success that can be achieved when innovation and unwavering commitment to excellence come together.
Final Thoughts
To conclude we may say that accounting services are very important for a successful business.
These financial services provide significant technical and legal support as well as guidance in improving the financial management and controls of various businesses, ensuring accurate bookkeeping, financial reporting, and compliance with local regulations.
In Dubai, you have the convenience that professional companies can focus on their core operations by outsourcing accounting services.
Overall, accounting services are considered very important for maintaining the financial health and success of many businesses in Dubai.
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The information provided herein is for the general information of the user and is provided in good faith. We make no representation or provide warranty of any kind, express or implied, regarding the adequacy, suitability, validity, or completeness of the information. Our advice in regard to UAE corporate tax and value added tax is based on our understanding of the relevant laws and the regulations issued. We cannot be held responsible for new regulations and/or interpretation of existing regulations by the FTA that is not consistent with our advice. Under no circumstance shall we have any liability to any user of this information or to third parties for any loss or damage of any kind incurred as a result of the use or reliance of this information.
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UAE VAT: Can I Claim VAT On Old Invoices in UAE
Input tax, i.e. VAT paid on the purchase of goods and services is claimable in the tax return by set off against the output VAT collected on sales invoices.
In the normal course, input tax should be recovered in the first tax period in which the following two conditions are satisfied:
- the tax invoice is received; and
- either the tax invoice has been paid in the period or the taxable person has decided to settle the invoice in a subsequent tax period – usually within six months after the agreed credit period.
Intention to settle the tax invoice:
Where the invoice has not already been settled within the tax period, it is pertinent to consider whether the taxable person has already decided to settle the invoice.
In this regard, merely receiving an invoice is not considered evidence of intention to settle.
However, if the tax invoice has been duly processed through the normal verification and approvals process of the taxable person and has been recorded in their accounting system, this is likely to be seen as a decision or intention to settle the invoice in due course.
It is important, however, to note that where an invoice has been received by the taxpayer, but has not been verified through the relevant processes to determine its validity and suitability for payment, it may not be possible to argue that the taxpayer has formed the intention to settle the invoice.
In such a case, the taxpayer should consider whether the input tax claim should be deferred to a later tax period.
In the case where a taxable person has received a tax invoice but has not yet decided regarding the settlement of the invoice, the Federal Tax Authority (“FTA”) may argue that the two conditions noted above – receipt of the invoice and the settlement of the invoice or the decision to settle – have not been satisfied.
In this case, therefore, it would not be appropriate to claim the input tax on such an invoice.
In such cases, therefore, the input tax claim invoice should be made in such later tax period when the decision to settle has been taken.
UAE VAT: Can I Claim VAT On Old Invoices in UAE?
Article 55 (2) of the Federal Decree-Law No. (8) of 2017 on Value Added Tax specifically provides that where input VAT on a tax invoice has not been claimed during a tax period notwithstanding that the taxable person was entitled to make such a claim, the taxable person may claim the tax in the subsequent period.
Situations may arise where input tax has not been claimed in the tax period when the taxable person was entitled to claim nor in the subsequent period, as provided in Article 55 (2).
In such circumstances, the FTA has clarified that the unclaimed input VAT may be claimed through a Voluntary Disclosure.
Voluntary Disclosure:
A voluntary disclosure is a process where the taxpayer notifies the FTA of an error or omission in a VAT return.
A voluntary disclosure for claiming input VAT would be made by amending the input tax previously reported in the VAT return of one of the two tax periods during which the taxpayer could have claimed the input VAT.
Voluntary disclosures is normally required to be made within 20 business days of the taxpayer becoming aware of the error or omission.
However, the FTA may accept late voluntary disclosures if the taxpayer is able to justify the delay by presenting an acceptable reason for the delay.
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Claim for periods before Tax Registration?
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A taxpayer that is newly registered for VAT can claim back VAT paid on goods and services purchased prior to its VAT registration, provided that the goods and services for which input VAT is being claimed were used to make supplies that would ordinarily give the right to input tax recovery.
However, input tax may not be recovered in the following cases:
- The goods and services for which input tax is being claimed, were not used for making taxable supplies.
- The input tax pertained to capital assets that were depreciated before the tax registration.
- In case of services which were received more than five years prior to the tax registration.
- where the goods were moved to another country.
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UAE VAT Implementation Services: What We Offer
Do you think that managing VAT obligations is too challenging for your business?
Beaufort Associates provides VAT Implementation Services in the UAE. Our financial consultants are fully qualified and trained to assist you and guide you on the Do’s and Don’ts of the UAE VAT regime.
We offer professional VAT compliance support and advice tailored to your business needs. Our team can help you to comply with the VAT taxation rules and regulations.
Here is what we can do for you:
- Help you to register with the FTA;
- Advise you on your reporting deadlines;
- Provide guidelines to avoid fines and penalties;
- Provide you with accounting support to ensure proper recording of VAT;
- Work with you to prepare your VAT tax returns;
- Arrange to file the VAT tax return with the tax authorities:
- Assist in filing for a Voluntary Disclosure:
- Assist in claiming a refund due to you
- Assist in claiming VAT refund for new residences for UAE Nationals.
We can also assist with corporate tax consulting, accounting and bookkeeping, audit and a host of other services.
If you need help with any of the above services, for your business in the UAE, feel free to contact us today and request a free initial consultation. We would be glad to assist you.
The information provided herein is for the general information of the user and is provided in good faith. We make no representation or provide warranty of any kind, express or implied, regarding the adequacy, suitability, validity, or completeness of the information. Our advice in regard to UAE corporate tax and value added tax is based on our understanding of the relevant laws and the regulations issued. We cannot be held responsible for new regulations and/or interpretation of existing regulations by the FTA that is not consistent with our advice. Under no circumstance shall we have any liability to any user of this information or to third parties for any loss or damage of any kind incurred as a result of the use or reliance of this information.
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The goal of Beaufort Associate is to offer its customers high-quality service. The business is committed to provide its clients quick, accurate, and trustworthy advice and services.
Its team of highly skilled chartered accountants in Dubai is competent in a range of accounting services for small businesses in the city.
Financial reporting is growing more and more difficult as corporate transactions become more complicated.
To assist clients in fulfilling their responsibilities under the International Financial.
- We have a strong track record of boosting business profitability.
- We’ll increase your cash flow.
- Your ability to make decisions is enhanced by us.
- By enhancing internal controls, we reduce business risk.
- We will work with you to win and keep the confidence of your stakeholders, including bankers, customers, suppliers, and other investors.
Advantages of Outsourcing Beaufort VAT Accounting Services in Dubai
Your Financial Operations Can Be Simplified
You can streamline your financial operations and concentrate on your main business operations by outsourcing your accounting requirements to Beaufort Associate.
All facets of your accounting services for small businesses in Dubai, including bookkeeping, payroll, and tax compliance, will be handled by our knowledgeable staff, ensuring accuracy and effectiveness.
Expertise is accessible
You have access to a group of highly qualified and knowledgeable accounting professionals when you work with Beaufort Associate.
Our professionals stay current on the most recent laws and industry best practices, ensuring that your financial problems are handled precisely and in accordance with the law.
Cost reduction
Your accounting operations could be outsourced to Beaufort Dubai for considerable financial savings.
You can employ our services at a fraction of the cost instead of hiring and training internal accountants.
We are able to provide excellent services at reasonable prices thanks to our effective processes and economies of scale.
Concentrate on Your Main Business
You can concentrate on what you do best—running your business—by giving us the responsibility of handling your accounting services for small businesses in Dubai.
You may focus on making strategic decisions, growing your market presence, and improving customer satisfaction with more time and resources at your disposal.
Superior Data Security
Data security is important, and Beaufort is aware of this. To protect your sensitive financial information, we use innovative technologies and strong security procedures.
Maintain Compliance with Local Laws
Operating Accounting services in Dubai, United Arab Emirates, necessitates adherence to numerous accounting and tax requirements.
One of the leading accounting firms in Dubai, Beaufort Associate has a thorough understanding of local rules and regulations, guaranteeing that your financial activities continue to be in complete compliance.
We take care of all the required reporting, filing, and paperwork, saving you time and lowering your risk of fines or legal troubles.
Partner with Beaufort Dubai, one of the top accounting firm in the UAE, to receive outsourced accounting services in Dubai, and take advantage of the many benefits that come with expert knowledge, cost savings, efficient operations, and peace of mind.
Concentrate on expanding your business while we precisely and effectively handle all of your accounting needs.
Accounting services in UAE for Startups
- At Beaufort we are aware of the distinct difficulties faced by startups and the need for specialist assistance.
- Our team of highly qualified experts is dedicated to supporting you along the road and making sure that your financial affairs are in order and in compliance with local laws.
- We also offer a variety of services to help your financial operations run more smoothly as part of our accounting services & VAT Consultancy in the UAE for startups.
- We handle everything from corporate tax in Dubai, UAE planning and compliance to bookkeeping and the creation of financial statements, enabling you to concentrate on expanding your firm.
- Our Team are knowledgeable about the tax system in the UAE and stay current on any changes, ensuring that your company is always compliant.
- We take the time to comprehend your company’s aims and objectives with our tailored approach. This enables us to offer specialized guidance and solutions that fit your unique demands.
- You will always be informed and have the power to make wise financial decisions thanks to our open and proactive communication culture.
Beaufort UAE Associate Accounting Services In UAE
We made up of a team of highly skilled individuals with a focus on business services.
To assist the expansion and prosperity of businesses, we provide prompt and dependable accounting services in the UAE.
The following are some of the ways Beaufort helps businesses:
- Constructing a strategy based on the demands of the client.
- Identifying and organizing the needs of the business for efficient assistance.
- Deciding on the best accounting systems for small businesses in Dubai, getting the necessary software, and putting the structure in place.
- Managing duties such bookkeeping, billing, payroll, calculating expenses, and other accounting-related activities.
- Using a qualified team to create and support the system.
- Ensuring that reports are prepared, submitted, and interpreted in a timely manner.
- Creating an efficient communication system to aid in decision-making.
- Putting the needs of high management into consideration while creating management reports.
Do you need help with registering your business for VAT and getting the tax certificate?
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Beaufort Offer Several key-services for Businesses in the UAE, including:
1. VAT Consultancy
Helping to implement the VAT, analyzing its effects, making the necessary changes to accounting services records and systems, and training accountants within enterprises.
2. TAX Services
Providing through a dedicated team of tax specialists expert understanding of the most recent tax laws and legal solutions for tax-related challenges.
3. Bookkeeping
Offering an extensive range of accounting and bookkeeping services.
4. Services Financial
Assisting clients in efficiently concentrating on organizational growth and managing their limited resources.
5. Management Accounting
Providing direction on financial management, financial analysis, and business planning to help businesses make wise business decisions.
6. Internal audit
Conducting interim and ongoing internal audits to evaluate and appraise firms’ internal control systems.
Contact us to request a free initial consultation today!
Looking For Top Notch Accounting Service in Dubai ?
Find Your #1 Accounting Service Provider Dubai, UAE.
Our team of skilled experts specializes in many different accounting disciplines, guaranteeing that your financial operations are effective, precise, and legal.
Beaufort Associate is your go-to source for thorough accounting solutions that boost the performance of your company.
Accuracy, effectiveness, and strategic financial management are guaranteed thanks to our expertise across several key accounting areas.
These are the primary fields in which we excel:
Bookkeeping Services
The need for bookkeeping services in Dubai, United Arab Emirates, is growing. According to UAE law, all corporate entities are required to abide by the IFRS (International Financial Reporting Standards) accounting laws and regulations.
- Services for outsourced bookkeeping include the setup and upkeep of daily transactions.
- Chart for account setup and review.
- Input of data, including keeping track of daily transactions.
- Depending on the needs, the frequency of visits will be decided; we can offer daily, weekly, monthly, and quarterly visits.
- Processing of accounts due and receivable
- Reconciliations of Banks
- Procedures that Comply with VAT
- Producing MIS Reports
We Have #1 Accountants in Dubai
One of the top accounting firms in Dubai, Beaufort UAE Associate LLC offers complete accounting services in Dubai .
A variety of services, including bookkeeping, financial statement preparation, budgeting, financial analysis, and others, are provided by our skilled team of specialists.
With order to help you make wise decisions, we also assist you with comprehending and analyzing the financial performance of your company.
You may streamline company operations and make sure that all financial concerns are handled as effectively as possible with our knowledge.
Why Choose Beaufort UAE: The Best Accountants in Dubai
It’s vision has guided us throughout the years: to become the market leader in the MENA region by offering all value-added services to “businesses” so they can innovate and develop a business model that enhances maximum sustainability and profitability.
It’s aim is to enable organizations to succeed more via unshakable dedication, unparalleled services, and an ongoing commitment to innovation.
Using our more than 20 years of experience, let us assist your business.
Our everyday journey Is guided by Our Set Principles
- Integrity is being true to our deeds, not just to our words; upholding integrity in behavior and producing outcomes of the highest caliber.
- Transparency upholds our interactions with partners, peers, and clients with decency and respect.
- Customer Care is devoted to the one guiding philosophy of exceeding clients’ commitments and expectations.
- They cherish our employees and foster a culture of trust, ownership, success, and creativity.
The information provided herein is for the general information of the user and is provided in good faith. We make no representation or provide warranty of any kind, express or implied, regarding the adequacy, suitability, validity, or completeness of the information. Our advice in regard to UAE corporate tax and value added tax is based on our understanding of the relevant laws and the regulations issued. We cannot be held responsible for new regulations and/or interpretation of existing regulations by the FTA that is not consistent with our advice. Under no circumstance shall we have any liability to any user of this information or to third parties for any loss or damage of any kind incurred as a result of the use or reliance of this information.
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Do you have questions about VAT return in UAE? In this article, you’ll find all the essential information about the VAT return process in the UAE.
What Is VAT Return?
At the end of each tax period, a tax registered person must submit a VAT return to the FTA. It is a report that summarises the value of the supplies and purchases a taxable person has made during the tax period and shows the taxable person’s VAT liability.
A tax return is a written statement that is submitted periodically. It states the details and calculations of tax liability or refund that are to be paid to or received from tax authorities.
If the output tax exceeds the input tax amount, you must pay the difference to the FTA. And if the amount of input tax exceeds the amount of output tax, a taxable person will have excess recoverable input tax. Then that person will be able to set it off against subsequent payments due to the FTA or get a refund from the FTA.
VAT Return Filing
So how can you file a VAT return? VAT return filing must be done online through the FTA portal: eservices.tax.gov.ae. But before you file the VAT return form on the portal, you should make sure you have met all the tax return requirements.
Taxable businesses must file VAT returns with FTA on a regular basis. Usually, they must do it within 28 days of the end of the tax period defined for each type of business. A tax period is a specific time for which the payable tax must be calculated and paid. It differs for businesses of different sizes.
- If a business has an annual turnover below AED150 million, the standard tax period is every quarter.
- If a business has an annual turnover of AED150 million or more, the standard tax period is every month.
If you fail to file a tax return within the specified time frame, that will make you liable for fines as per the provisions of Cabinet Resolution No. 40 of 2017 on Administrative Penalties for Violations of Tax Laws in the UAE.
UAE VAT Return Format
The details and data that must be included in the VAT return for the purpose of tax are specified in the UAE VAT executive regulations. All the details that are required for VAT Return must be prepared in accordance with the UAE VAT Return format issued by the authority.
The VAT return form is at a summary level or a consolidated level. The registered person has to enter the following consolidated details of total supplies:
- both purchases and sales
- output VAT collected on supplies
- eligible input VAT paid on purchases
- the total tax due.
The form also includes details about the name, address, and tax registration number (TRN) of the registrant as well as the VAT Return period and the due date of submission and the tax period. These details are applicable to all VAT registrants and are pre-populated in the online form. In addition to the above-mentioned information, the return format also consists of other additional details:
- Supplies subject to reverse charge provisions
- Zero rated supplies
- Exempt supplies
- Goods imported into the UAE
- Profit Margin Scheme applicability
- Tax Refunds for Tourists Scheme
The registrant may save the online form as a draft and when all the required information has been satisfactorily entered, they may submit the form by clicking the “Submit” button.
How to Submit VAT Return in UAE
As we have already mentioned, VAT returns must be filed electronically through the FTA portal. A taxable person can submit the form themselves or delegate this right to another person who will do it on the taxable person’s behalf. That can be a tax agent or a authorized representative.
So how to submit a VAT return in UAE? To access the VAT return form, you should login to the e-Services portal using your registered username and password. Then you will need to navigate to the option to open your VAT return and fill in all the required details. When you finish, you have to click Submit. After submitting the return, you will receive an e-mail from the FTA confirming the submission of the VAT return form. Finally, you have to pay the due tax.
Dealing with VAT is a tedious, complex, and a rather time-consuming process. And you should remember that taxable businesses should keep their books in a well-organized manner to avoid penalties.
If you find VAT return too challenging, you may need professional guidance.
Contact us to schedule a free consultation to discuss how we can help you to establish a VAT-compliant accounting system.
VAT Return in UAE: Learn How We Can Help You
Beaufort Associates can help you to manage VAT obligations for your business in UAE. You can rely on our team during every stage of the VAT return process. We can advise you on your reporting deadlines to ensure you can avoid fines and penalties. Our highly-qualified and experienced consultants will work with you to prepare your VAT tax returns and arrange the VAT return filing with FTA on time. If you need professional guidance and support with managing the VAT aspects of your business in UAE, please contact us any time.
Here’s a summary of important updates related to VAT in March and June 2023 in the UAE:
March 2023 Update – Voluntary Disclosure of VAT Errors:
Starting from March 1, 2023, businesses are required to voluntarily report any errors in their VAT returns to the Federal Tax Authority (FTA).
Previously, only errors exceeding AED 10,000 (approximately USD 3,750) needed to be disclosed. Now, there is no minimum threshold, and even minor errors must be reported.
Fixed fines of AED 1,000 apply for the initial disclosure and AED 2,000 for subsequent disclosures of such errors. Late payment penalties may also be imposed.
This means that, with the removal of the threshold, the penalty for small errors can sometimes be higher than the actual tax liability.
VAT Input Apportionment Update:
In March, the UAE issued guidance on VAT input apportionment.
This guidance outlines the rules for general input tax apportionment and introduces special methods for specific types of companies where the standard input tax-based apportionment method may not result in a fair and reasonable outcome.
The guide covers:
- General input tax apportionment rules.
- The application process for using a special method of input tax apportionment.
- The necessary information required to complete the application form for a special apportionment method.
June 2023 VAT Update – Tax Clarification:
A Tax Clarification is an official document issued by the FTA in response to a query.
It provides guidance on the tax treatment of specific transactions based on information provided by the applicant, without FTA verification.
Importantly, the clarification only applies to the applicant and the mentioned transaction(s), without setting a precedent for others or different transactions involving the same applicant.
New VAT Rules in UAE (2023)
Businesses in the UAE need to stay informed about the new VAT rules. There have been recent amendments to the UAE VAT decree law, which will be implemented from January 2023.
Here is a summary of the key changes to the VAT Law that will take effect from January 1, 2023:
Here are the important points regarding tax audits and related timelines in the UAE:
1. Extended Time for Tax Audit:
In general, a tax audit for a monthly or quarterly tax period cannot take place after 5 years from the end of that tax period. However, if a taxpayer is notified of a tax audit within those initial 5 years, the audit can be conducted or completed during the subsequent 4 years following the notification.
2. Tax Audit After Voluntary Disclosure:
If a Voluntary Disclosure for a monthly or quarterly tax period is submitted in the 5th year from that tax period, the Federal Tax Authority (FTA) will have an additional 1 year to conduct a tax audit. This extra time allows the FTA to process the voluntary disclosure and carry out additional audits based on the disclosed information.
3. Tax Evasion:
In cases of tax evasion, a tax audit can be conducted within 15 years from the end of the tax period in which the tax evasion occurred. Tax evasion is defined as a person, whether registered or not, using illegal methods to reduce the amount of tax owed, not paying the tax, or obtaining an ineligible tax refund.
4. Failure to Obtain VAT Registration:
Some individuals might think that by not registering for VAT, they can remain unnoticed by tax authorities. However, if a person fails to obtain VAT registration, the Federal Tax Authority (FTA) may conduct a tax audit within 15 years from the date when that person should have been registered.
It’s important for businesses, especially those making zero-rated supplies, to reassess whether they are obligated to obtain VAT registration.
5. Good News for 100% Exporters:
If a business exclusively engages in zero-rated supplies (100% zero-rated), they are not required to comply with periodic VAT filings. These businesses have the option to request an exception from VAT registration. As of January 1, 2023, even VAT-registered businesses can apply for an exception from VAT registration if they meet the criteria.
6. Additional Compliance for Input Credit on Imported Services:
Many businesses pay for services from overseas providers based on agreements without formal invoices. Recent changes in VAT laws specify that for the import of services, businesses can recover input credit only if they receive and retain invoices in accordance with VAT regulations.
7. Construction Sector and Retention Payments:
In the construction sector, when the time between progressive milestones for delivering goods or services and the claims for retention payments exceeds 12 months, VAT may still be applicable. A specific date of supply for VAT purposes has been introduced, the date of expiration of one year from when the goods or services were provided.
8. Deemed Supplies to Related Parties:
Previously, deemed supplies, like providing goods/services free of cost (FOC) to related parties, could trigger a VAT liability under existing laws. Under the amended VAT laws, a company may not have a VAT liability for FOC goods or services provided to related parties if the recipient company is eligible to recover 100% input credit on its purchases.
These updates address VAT implications in the construction sector, particularly concerning retention payments, and clarify the treatment of deemed supplies to related parties, considering their input credit recovery eligibility.
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The information provided herein is for the general information of the user and is provided in good faith. We make no representation or provide warranty of any kind, express or implied, regarding the adequacy, suitability, validity, or completeness of the information. Our advice in regard to UAE corporate tax and value added tax is based on our understanding of the relevant laws and the regulations issued. We cannot be held responsible for new regulations and/or interpretation of existing regulations by the FTA that is not consistent with our advice. Under no circumstance shall we have any liability to any user of this information or to third parties for any loss or damage of any kind incurred as a result of the use or reliance of this information.
What is the VAT Certificate in UAE?
VAT registration is a mandatory step towards obtaining a VAT certificate for companies and individuals doing business in the UAE.
The VAT Certificate UAE is a document that serves as an official confirmation that a business entity is registered under the VAT law for tax collection at every step of product development.
This certificate is the final step in the VAT registration process. The document is issued by the Federal Tax Authority and carries a unique number referred to as Tax Registration Number, often referred to as (TRN), that is evidence of the entity having been already registered for VAT.
You receive it once your VAT registration is completed successfully.
The VAT certificate contains the following important information:
- Name, registered address and telephone number of VAT registrant
- TRN number
- Effective registration date
- First VAT return period and VAT return due date
- Start and end dates of tax periods
VAT Registration Certificate: How to Apply
In the UAE, businesses whose annual turnover exceeds the mandatory registration threshold of AED 375,000 and the voluntary registration threshold of AED 187,500 are allowed to apply for VAT registration.
How To Get VAT Certificate From (FTA) Portal
You can do it only online on the FTA portal and after you complete the required registration information, you can apply for the VAT Registration Certificate.
Here is how you can do that.
– First, you have to create an e-Service account with FTA. You need to sign up, providing your e-mail details, and create a user name and password.
– To apply for VAT registration, you need to login into your e-Service account using your login credentials and click on the Register for VAT button to start the registration process.
– You should read the VAT Getting Started Guide to get a better idea of certain important requirements and the information you should have to provide.
– You have to follow certain steps – you need to complete the registration form that contains eight sections, such as:
- About the applicant
- Details of the business/entity to be registered
- Contact details
- Banking details
- Business relationships (optional)
- About the VAT registration
- Declaration
- Review & submit
You can track your progress as you fill out the form. You need to fill all the section of online form. Keep in mind that you can move to the next sections only when you fill out all the mandatory fields of the current section.
All of them are marked with a red asterisk (*) if one or some of the mandatory fields are not filled out.
The portal is designed to alert you with a pop-up message indicating the relevant fields where you need to enter your details.
When you finish completing the registration form, you need to review all the details in all the sections, verify them, and complete the registration process by clicking the Submit for Approval button.
Remember: you should submit only if you are certain that all of the information is correct.
How to Download VAT Certificate in UAE
So how to get your certificate? Here is the Updated procedure.
How to download VAT Certificate in UAE?
To get your VAT Registration certificate if you’ve been a taxpayer before, follow these simple steps:
1. Log in to the EmaraTax Platform using your Emirates ID, UAE Pass, or your taxpayer account.
2. Once you’re in the dashboard, you’ll find the VAT registration certificate under the “My Correspondences” section of your Taxable Person account.
3. Click on the certificate, and then download it in PDF format.
Important note: If you’ve used the system before and your tax registration certificate wasn’t previously accessible as a PDF in your dashboard, you won’t find it in your EmaraTax dashboard.
In this situation, to obtain an updated registration certificate, you’ll need to submit a VAT registration amendment application through EmaraTax. This application should include any updated information, such as your trade license, Emirates ID, contact details, and so on. Your registration certificate will be issued once the FTA (Federal Tax Authority) approves your application.
Do you need help with registering your business for VAT and getting the tax certificate?
Contact us to schedule a free consultation to learn how we can help you to register for VAT and ensure compliance with the VAT rules and regulations.
Learn More about What We Offer
You can benefit from our comprehensive management consulting and business advisory services in UAE.
Beaufort Associates has a great team of experienced VAT consultants that can assist our clients in applying for VAT Registration and getting VAT Certificate. We also offer assistance with accounting and bookkeeping.
Our experts are dedicated to providing you with world-class services tailored to the specific needs of your business.
We will provide you with professional advice to help you understand the taxation system and ensure that you always remain compliant with VAT laws in UAE. We also offer the necessary accounting and invoicing guidelines under VAT and support for preparing and filing the first VAT return.
Contact us to request a free initial consultation today!
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The information provided herein is for the general information of the user and is provided in good faith. We make no representation or provide warranty of any kind, express or implied, regarding the adequacy, suitability, validity, or completeness of the information. Our advice in regard to UAE corporate tax and value added tax is based on our understanding of the relevant laws and the regulations issued. We cannot be held responsible for new regulations and/or interpretation of existing regulations by the FTA that is not consistent with our advice. Under no circumstance shall we have any liability to any user of this information or to third parties for any loss or damage of any kind incurred as a result of the use or reliance of this information.
Value Added Tax (VAT) is a general consumption tax introduced in the UAE on 1 January 2018 with a rate of 5%, and it applies to the majority of transactions in goods and services. Are you looking for advice on how to pay VAT in UAE? In this article, you’ll find all the necessary information on how to do it right.
Besides, businesses may choose to register for VAT voluntarily if the total value of their taxable supplies and imports (or taxable expenses) exceeds the voluntary registration threshold of AED 187,500.
Here is how it works.
- UAE imposes VAT on tax registered businesses on a taxable supply of goods or services at each step of the supply chain.
- Businesses pay the government the tax that they collect from their customers.
- At the same time, they receive a refund from the government on the tax that they have paid to their suppliers.
VAT Filing in UAE
VAT registered businesses must submit a VAT return to Federal Tax Authority (FTA) at the end of each tax period. VAT filing in UAE is done electronically through the FTA portal. The return can be submitted by the taxable person or another person who has the right to do so on the taxable person’s behalf. For example, you can hire a tax agent or an authorized representative to do it for you.
Taxable businesses must file VAT returns with FTA and pay the tax within 28 days of the end of the tax period as determined by FTA for each business. If that date falls on a public holiday or weekend, it must be submitted on the next working day after the holiday or weekend.
The standard tax period is:
- quarterly for businesses with an annual turnover below Dh150 million
- monthly for businesses with an annual turnover of Dh150 million or more.
VAT Submission UAE
The businesses are required to file VAT return online using the Federal Tax Authority (FTA) portal. The FTA Portal is designed to accept the returns only through online mode because offline capabilities to file VAT return through XML and EXCEL are currently not available. That means that taxpayers have to manually provide the values of Sales, Purchase, Output VAT, Input VAT, etc., in the appropriate boxes of the VAT return form available on the FTA portal.
The VAT Return form is named “VAT 201”. You need to fill it and submit it online. The Form VAT 201 has seven sections:
- Taxable Person Details
- VAT Return Period
- VAT on sales and all other outputs
- VAT on expenses and all other inputs
- Net VAT Due
- Additional reporting requirements
- Declaration and Authorized Signatory
Each of these sections consists of different fields where taxpayers have to provide the details to complete the VAT Tax return filing.
Before submitting the VAT Return, you should take utmost care in verifying all the details. You should click the Submit button only when you are sure that all the information is correct. After the successful filing of the VAT Return, you will receive an e-mail from FTA confirming the VAT Return submission.
Thinking of outsourcing your tax work to ensure that your VAT is calculated correctly?
Reach out to learn how we can help you to establish and implement VAT compliant accounting system and processes.
How to Pay VAT in UAE
If the output VAT in VAT return is higher than the recoverable input VAT, the difference will result in a VAT liability, and it needs to be paid to the FTA. Registered businesses must pay their due tax to the Federal Tax Authority, using one of the following options:
- locally issued UAE bank credit card
- bank transfer
- e-Dirham card
When you make VAT payments using your e-Dirham card at the e-Service portal, you will have to pay a transaction fee of AED 3. A payment using a credit card will typically incur a charge between 2% – 3% of the total payable amount.
It is possible to make partial payments. But you should make sure you pay the entire amount before the due date because there are penalties for late filing of a return or late payment of VAT. Besides, a taxable person may be subject to a penalty if the information submitted in a VAT return is incorrect.
And remember that although tax returns must be submitted and paid electronically, you must keep accounting records and documents relating to business activities properly. That will allow the FTA to check that you have got everything right. These business records include such documents as the balance sheet, profit and loss account, payroll records, wages, fixed assets, records and inventory statements.
Learn How We Can Help in Filing VAT
Beaufort Associates offers world-class business advisory, management consulting, and VAT consultancy services for businesses in different industries in the UAE. Our experts know all the intricacies of the UAE tax laws and regulations. They can provide you with VAT compliance support and guidance to ensure that your company meets all regulatory requirements.
We will provide you with accounting advice and work with your team to prepare the VAT return. We will also facilitate the filing of the VAT return with the tax authorities after your approval. Contact us for a free initial consultation if you need reliable help to manage your business’s VAT aspects.
The information provided herein is for the general information of the user and is provided in good faith. We make no representation or provide warranty of any kind, express or implied, regarding the adequacy, suitability, validity, or completeness of the information. Our advice in regard to UAE corporate tax and value added tax is based on our understanding of the relevant laws and the regulations issued. We cannot be held responsible for new regulations and/or interpretation of existing regulations by the FTA that is not consistent with our advice. Under no circumstance shall we have any liability to any user of this information or to third parties for any loss or damage of any kind incurred as a result of the use or reliance of this information.
A value-added tax or VAT is a general consumption tax on the consumption of goods and services, applied at each stage of the supply chain. It is based on the value added at each stage from production to the point of sale. More than 160 countries around the world use value-added taxation.
The UAE introduced a value-added tax on January 1, 2018, together with other GCC states in order to diversify their economies and reduce their dependence on oil. In this article, you can find information about the specifics of the VAT in Dubai and the GCC region.
UAE VAT Law
The UAE VAT law came into effect on January 1, 2018. It sets out the framework within which value-added tax is levied in the UAE.
VAT registered businesses collect the tax on behalf of the UAE government, and consumers bear the VAT in the form of a 5% increase in the cost of taxable goods and services. Businesses are required to be clear about how much VAT a customer has to pay for each transaction.
VAT-registered businesses must report the amount of value-added tax they have charged and the amount of value-added tax they have paid to the government on a regular basis. The reporting is done online.
If you have charged more VAT than you have paid, you have to pay the difference to the government. If you have paid more tax than you have charged, you can reclaim the difference.
Most taxable persons are required to file a quarterly VAT return (3 calendar months), with the quarter ending date as determined by the Federal Tax Authority (FTA). The FTA may exceptionally require the taxable person to file a monthly return. The tax return for a quarterly, monthly or other period as determined by the FTA must be submitted, together with tax due, if any, within 28 days following the end of the tax period. Failing to file a tax return within the specified time frame will lead to fines. It’s crucial to have a trustworthy VAT consultant to avoid any issues.
VAT in GCC Region
The UAE coordinates VAT implementation with other GCC countries. All six GCC member states signed the Common VAT Agreement in June 2016. They agreed that each GCC Member State would introduce a VAT system at a rate of 5%.
Three of the states – the UAE, Kingdom of Saudi Arabia, and Bahrain – have already implemented VAT after signing the VAT GCC Framework. But there has been much debate over the most suitable timing for implementation of VAT in the remaining states.
Here is what we know at the time of writing.
- Oman will introduce its new VAT system in April 2021.
- Qatar is currently expected to implement VAT in the second or third quarter of 2021.
- Kuwait is expected to implement VAT by 2022.
Saudi Arabia tripled value-added tax to 15% in July 2020 as a part of measures to support its economy and to shore up state finances, but the Kingdom could review VAT increase after Covid-19 pandemic ends.
Since the UAE economy is already partly diversified and has non-oil revenues, the government has no plans to raise VAT to more than 5%.
VAT Threshold in the UAE for Businesses
Businesses can register for VAT through the eServices section on the FTA website. So what are the criteria for registering?
The mandatory VAT threshold in the UAE is AED 375,000 per year. Also, if the businesses anticipate that the total value of supplies will exceed the mandatory registration threshold of AED 375,000 in the next 30 days, then they have to register for UAE VAT.
VAT registration is optional for businesses whose supplies and imports exceed AED 187,500 per year. Non-resident companies or individuals with economic activities in the UAE are also required to register for VAT.
VAT Implementation in the UAE
Businesses need to understand their obligations in respect of the registration and compliance issues that are mandatory and take necessary steps for VAT implementation into their operations. It’s also important to stay updated about VAT in UAE latest news. That will allow you to be informed about possible changes in the VAT Implementation in the UAE.
Businesses must levy VAT on their goods and services at each transactional stage, from raw materials to finished products. According to the regulations, businesses are responsible for carefully documenting their business income, costs, and associated VAT charges.
That means that you must properly keep business records that will allow the government to check that you have the right documentation. These accounting records and documents relating to business activities include the balance sheet, profit and loss account, payroll records, wages, fixed assets, records, and inventory statements.
Do you need professional guidance to ensure you are compliant with your VAT obligations?
Contact us and schedule a free consultation to learn how we can help you to establish and implement VAT compliant accounting system and processes.
UAE VAT Implementation Services: What We Offer
Do you think that managing VAT obligations is too challenging for your business? Beaufort Associates provides VAT Implementation Services in the UAE. Our financial consultants are fully qualified and trained to assist you in adopting the necessary changes relevant to GCC’s new tax policy and guide you on the Do’s and Don’ts of the system.
We offer professional VAT compliance support and advice tailored to your business needs. Our team can help you to comply with the VAT taxation rules and regulations.
Here is what we can do for you:
- Help you to register with the FTA;
- Advise you on your reporting deadlines;
- Provide guidelines to avoid fines and penalties;
- Provide you with accounting support to ensure proper recording of VAT;
- Work with you to prepare the VAT tax returns;
- Arrange to file the VAT return with the tax authorities.
If you need help to manage the VAT aspects of your business in the UAE, feel free to contact us today and request a free initial consultation! We would be glad to assist you.
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The information provided herein is for the general information of the user and is provided in good faith. We make no representation or provide warranty of any kind, express or implied, regarding the adequacy, suitability, validity, or completeness of the information. Our advice in regard to UAE corporate tax and value added tax is based on our understanding of the relevant laws and the regulations issued. We cannot be held responsible for new regulations and/or interpretation of existing regulations by the FTA that is not consistent with our advice. Under no circumstance shall we have any liability to any user of this information or to third parties for any loss or damage of any kind incurred as a result of the use or reliance of this information.
Do you have a business in the UAE and are unsure whether you need to hire a registered tax agent to assist you in compliance under VAT? Read the article to learn about the responsibilities of a tax agent in the UAE registered with the Federal Tax Authority (FTA).
What Is Tax Agent in UAE?
A tax agent in UAE is a person registered with the tax authorities who represents their clients in front of the tax authorities when they authorize a tax agent to do so. A tax agent takes care of the client’s tax obligations and performs various legal activities prescribed by the Law. A tax agent can help you smooth the VAT process and may act as a mediator between you and the Federal Tax Authority.
What Are the Roles and Responsibilities of a Tax Agent?
Tax agents in the UAE are responsible for assisting their clients in fulfilling their tax-related obligations and helping them to satisfy the provisions of the VAT Law.
So what can they do for you?
- They help achieve tax compliance, carry out legal activities, manage financial records related to tax transactions, and prepare and file a VAT return.
- Tax agents can provide proper advice and interpretation of the UAE VAT Law.
- They can play a key role during the tax audit conducted by the FTA.
- Tax agents in the UAE can provide all information, documents, records, and data regarding the Taxable Person they represent if the FTA requests it.
- Tax agents can inquire about tax-related matters with the FTA and submit requests for reconsideration of decisions issued by the FTA.
- They can also help their clients better plan their taxes and differentiate between the Dos and Don’ts.
Tax agents must maintain the confidentiality of any information obtained in the course of performing their duties. They should refuse to participate in any activity or work, which may result in a breach of any law established by the authority.
Should You Hire a Tax Agent in Dubai?
Paying taxes is compulsory for any business in the UAE, as this revenue is used for the development of the country. Any taxable person in the UAE has the right to appoint a registered tax agent to handle their tax affairs with the authority. But the responsibility of the taxable person in relation to the authority will remain even after appointing a tax agent.
Generally, you may need to hire a tax agent in situations when there is a tax dispute or tax appeal with complexity. But for day to day tax compliance, tax agent services are not necessarily required. In fact, any taxpayer can directly interact with the tax authorities even for tax disputes and appeals without the need for a tax agent.
Still, you may find it challenging to manage tax obligations for your business in the UAE.
Need assistance to ensure your business is compliant with its tax obligations??
Contact us to schedule a free consultation and learn how we can help you manage your company’s taxes.
How to Become a Registered Tax Agent
A person who is registered with the FTA, as well as obtained a license from the UAE Ministry of Economy or from any other relevant authority, can practice as a tax agent in the UAE. A person who wants to register as a tax agent in the UAE has to fulfill the following conditions according to the Law.
- They must be of good conduct and behaviour and, in addition to this, they should not have been involved in any criminal or illegal activity.
- They should be qualified to perform the functions and duties of the profession as specified in the Executive Regulations. That means a person should hold a certified bachelor or master’s degree in tax, accounting, or Law from a recognised educational institution. If the applicant holds a bachelor’s degree in any other field, they should submit a tax certification from an internationally recognised tax institute.
- They should hold a certificate providing evidence of recent relevant experience of at least three years in tax, accounting, or Law.
- A person must provide a certificate that proves their verbal and written communication skills in both Arabic and English.
- They are required to pass the FTA’s Tax Agent exam.
- They must be physically and medically fit to perform the duties required by profession.
- A tax agent working in the UAE must also hold professional indemnity insurance.
Any person who wants to be a tax agent and has met those requirements can submit an application and apply for registration. The FTA has the right to request more documents that they consider necessary that can help them to decide whether they should approve or reject the application. The FTA is expected to provide a decision within or after 15 working days from the date when the application is submitted.
Let Beaufort Associates Handle Your Taxation Duties
Beaufort Associates provides management consulting, business advisory, and VAT consultancy services for businesses in different industries in Dubai and the GCC region. We can also help you to establish an effective accounting system and processes.
We have an excellent reputation for delivering world-class services to the business community. With more than 20 years of experience, we can ensure you’ll always get the best guidance in any aspect of managing your business.
Our tax consultants know the intricacies of the UAE tax laws and regulations and can help you navigate an increasingly complex tax environment. They can provide you with professional advice to address your tax-related issues and guide you for better VAT compliance step-by-step.
Our experts will help you manage your taxes using the best strategic tools most cost-effectively. They will help you with up-to-date information regarding any taxation policy changes and ensure that your company meets all regulatory requirements. If you need additional information about our services, contact us today!
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Tax Agent Services
Beaufort Associates is a certified Tax Agent in the UAE. Our team of Tax Experts has successfully managed numerous situations and offered the most appropriate solutions to companies, ensuring that businesses can consistently operate smoothly and efficiently.
Beaufort tax agents can also assist you in comprehending the new Corporate Tax Law, gaining insights into UAE Corporate Tax, and determining the optimal approach for implementing corporate tax in your business.
Beaufort is an FTA Approved Tax Agency in Dubai, and as a registered Tax Agent in the UAE, we guarantee VAT compliance to support all types of businesses.
Advantages of Hiring a Tax Agent in UAE
A tax agent can manage all of a company’s tax-related matters, allowing business owners and key management personnel to concentrate on other crucial responsibilities.
The following are the key advantages of hiring a tax agent in the UAE:
1. Assists in Tax Preparations, Assessments & Representations: A tax agent aids in preparing tax documents, conducting assessments, and representing the company in tax matters.
2. Helps You Save Money and Time: By handling tax affairs efficiently, a tax agent can help save both money and time for the business.
3. Assists in Tax Registration, Implementation, and Compliance: Tax agents provide guidance on tax registration, assist in implementing tax strategies, and ensure compliance with tax regulations.
4. Assists You in Filing Your Returns Timely & Accurately: Tax agents help businesses file their tax returns promptly and with precision, minimizing the risk of errors and penalties.
5. Acts as a Long-Term Advisor: A tax agent can serve as a long-term advisor, offering insights and strategies to optimize the company’s tax position over time.
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Tax Agent Services in UAE
It is strongly advisable for companies and individuals subject to taxation to engage the services of a tax agent.
Companies may not always have the focus or time to address their tax obligations, making it highly beneficial to appoint a tax agent to handle tax matters on their behalf.
Our highly experienced and professional tax consultants played a crucial role in the successful implementation of VAT in the UAE.
They have provided invaluable support to the business community in understanding the laws and regulations surrounding taxation.
Beaufort Associates boasts qualified tax consultants in the UAE who possess in-depth knowledge of UAE tax laws and regulations specific to the region.
As one of the leading tax agents in Dubai, we offer the best and top-notch tax agent services in the UAE.
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The information provided herein is for the general information of the user and is provided in good faith. We make no representation or provide warranty of any kind, express or implied, regarding the adequacy, suitability, validity, or completeness of the information. Our advice in regard to UAE corporate tax and value added tax is based on our understanding of the relevant laws and the regulations issued. We cannot be held responsible for new regulations and/or interpretation of existing regulations by the FTA that is not consistent with our advice. Under no circumstance shall we have any liability to any user of this information or to third parties for any loss or damage of any kind incurred as a result of the use or reliance of this information.
Under UAE VAT Law, the responsibility to levy, collect, and pay tax to the Government is on the supplier. But there is also a reverse charge mechanism applied on certain notified supplies when the recipient or the buyer of goods or services is responsible for paying the tax to the Government.
The reverse charge mechanism under VAT is used for transactions from across the border. This provision frees the business from physically paying VAT at the point of import. Understanding this mechanism is crucial for businesses that import goods into the UAE because the provision differs from other clauses in the UAE VAT Law.
What Is Reverse Charge Mechanism?
Normally, the supplier of goods or services charges VAT on sales and then pays the tax so collected to the Government. This process of a registered supplier collecting tax from his customers is called a forward charge mechanism.
So what is the reverse charge mechanism in the UAE?
In the reverse charge mechanism (RCM) under UAE VAT Law, the supplier does not charge VAT to the customer. Instead, the buyer or end customer is responsible to pay the tax directly to the government authority.
In effect, the obligation of reporting a VAT transaction is shifted from the seller to the buyer. The buyer will need to record the VAT transaction on purchases (Input VAT) and sales (Output VAT) in their VAT return in the respective VAT return period.
Why Was VAT Reverse Charge Mechanism Introduced?
If the supplier does not have a business in the UAE, tracking their business transactions and ensuring VAT compliance becomes difficult for the Federal Tax Authority (FTA). That is why buyers who are residents of the UAE have to pay VAT on a reverse charge basis. That levels the playing field for domestic and foreign supplies and helps to avoid tax evasion on any taxable supplies. Another reason is that the VAT reverse charge mechanism eliminates the responsibility for the businesses outside the UAE to register for VAT in UAE.
Reverse Charge Mechanism VAT UAE: When Does It Apply?
The recipients that have a business in the UAE and buy goods from the suppliers from outside the UAE must pay VAT on a reverse charge basis. According to the UAE VAT Law, if the taxable person imports concerned goods or concerned services for business purposes, they are treated as making a taxable supply to themselves. So they are responsible for all applicable taxes.
The Executive Regulations specify conditions when UAE VAT reverse charge mechanism applies and additional obligations related to record keeping for tax calculated according to the RCM.
The UAE VAT Law lists the following supplies that are liable for reverse charge mechanism of VAT in UAE if the applicable conditions are met as it is prescribed in UAE Executive Regulations:
- Import of a concerned product or service for business purposes;
- Supply of a product or service by a supplier that does not have a residence in UAE to a taxable entity with the place of residence within the UAE’s jurisdiction;
- Taxable supply of refined or crude oil, processed or unprocessed natural gas, and hydrocarbons for resale or production and distribution of any form of energy by a registered supplier to a registered buyer in the State of UAE.
You should keep in mind that reverse charge is generally applicable when purchases are made from outside the UAE. If all purchases are made locally, the reverse charge mechanism is not applicable.
Reverse Charge Mechanism UAE: What Are the Requirements?
So if your business is a recipient involved in a reverse charge transaction, what should you do? First, you should calculate the amount of tax to be paid to the Federal Tax Authority (FTA) and self-account the VAT amount as input tax during the purchase. Then you need to declare it in your VAT return. Besides, you may claim input credit if possible. It is also essential to maintain the necessary documents like invoices and payment records for future reference as proof of tax payment.
Here are the requirements for the reverse charge mechanism in the UAE:
- Businesses that receive goods or services must be registered for VAT.
- Every registered business owner must keep proper records of their supplies that incur a reverse charge.
- Invoices, receipt vouchers, and refund vouchers should specify whether the tax payable for that particular transaction is through reverse charge.
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Reverse Charge VAT in the UAE: How Beaufort Associates Can Help You
If your company is registered for VAT and you have recently imported goods from outside the UAE, you need to analyze whether the reverse charge mechanism should be applied to that transaction. That requires a clear understanding of the latest tax regulations in the UAE.
But as you see, reverse charge VAT regulations can be very confusing for business owners because of their complicated nature. So you may need a professional and experienced opinion to understand how and when to use the reverse charge mechanism under VAT.
Beaufort Associates offers a wide range of VAT consultancy services in the UAE. Our experienced VAT consultants can provide you with professional support and advice tailored to your business needs.
We can assist you in managing every VAT aspect of your business, including handling reverse charge mechanism transactions. You can always count on us when you need guidance on VAT registration, VAT return filing, and Vat implementation in the UAE. Contact us today for a free consultation!
The information provided herein is for the general information of the user and is provided in good faith. We make no representation or provide warranty of any kind, express or implied, regarding the adequacy, suitability, validity, or completeness of the information. Our advice in regard to UAE corporate tax and value added tax is based on our understanding of the relevant laws and the regulations issued. We cannot be held responsible for new regulations and/or interpretation of existing regulations by the FTA that is not consistent with our advice. Under no circumstance shall we have any liability to any user of this information or to third parties for any loss or damage of any kind incurred as a result of the use or reliance of this information.
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