Starting your business in the UAE? Navigate VAT for your newly established company
February 20, 2024
If you have recently established an entity in the UAE, it is imperative for you to ensure seamless integration into the local business landscape. One key step towards it is compliance with Value Added Tax (VAT), a pivotal component of the UAE's compliance framework.
VAT implementation involves several critical obligations that demand your consideration to ensure compliance and successful operations. We have outlined these key obligations below, serving as a comprehensive guide to help you navigate this crucial area:
- VAT Registration: Assess whether your company meets the threshold for VAT registration and submit the registration application to the Federal Tax Authority (FTA).
- Taxable Supplies: Identify the goods and services your company provides, that are subject to VAT. Determine the correct VAT rate applicable to each category.
- Input Tax: Keep accurate records of VAT paid on purchases and expenses (input tax), that can be offset against VAT collected from customers (output tax). Proper documentation is essential to support input tax claims.
- Output Tax: Calculate and apply the appropriate VAT on taxable supplies to your customers. Ensure that invoices include the correct VAT amount.
- VAT Returns: Submit regular VAT returns to the FTA, reporting the output tax collected and input tax claimed during the specified period.
- VAT Payment: Fulfill your VAT liability within the stipulated timeframe through designated payment channels.
- Compliance: Maintain precise records and documentation of all VAT-related transactions for a minimum of five years. Adhere to FTA regulations and respond promptly to any inquiries or audits.
- Reverse Charge Mechanism: Understand and apply the reverse charge mechanism if your company engages in transactions subject to reverse charge provisions.
- Exempt and Zero-Rated Supplies: Differentiate between exempt supplies (no VAT) and zero-rated supplies (VAT at 0%). Ensure accurate documentation and treatment of these supplies.
- Cross-border Transactions: Comply with specific rules and procedures for imports, exports, and other cross-border transactions, including customs declarations and documentation.
How MBG can assist you
We recognize that stepping into a new business environment involves numerous intricacies. Therefore, it is essential for your business to partner with a VAT expert, ensuring your VAT compliance journey is smooth and successful. Leading businesses of varied scales outsource VAT-related compliances to a registered tax agent approved by the Federal Tax Authority (FTA).
Our professional advisors at MBG, experienced and well-versed in the UAE's VAT landscape, tailor made solutions to address the unique requirements of your recently established business.
We have years of experience in conducting VAT Compliance Reviews, VAT Health Checks and VAT Smart Reviews. We help you identify areas of high risk and suggest ways of improving your process and mitigating these risks. Additionally, we can be your legal representative by directly dealing with the FTA. Contact us for assistance with your VAT related queries.