Value Added Tax in UAE (VAT)
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Value Added Tax (VAT) is an indirect tax on consumption and it applies to most goods and services. VAT is levied on business transactions.

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Congratulations

Indirect Tax Committee of ICAI has selected our partner

CA Jayaprakash M C

as an approved faculty member for VAT for GCC Countries

VAT in UAE

What is VAT?

VAT is a tax levied on every value addition of all goods and services. The goods and services supplied at every stage will be charged with the respective rate of VAT which will be considered as the output VAT of the registered person for the taxable period. This will be set off against the VAT paid for and against all input goods and services directly connected to the business activity which will be the net tax payable by the registered person for the respective tax period. Thus every registered person will end up by paying net VAT on the incremental value addition made by him in the process/ stage of the transaction ultimately to end up with tax on the final product collected by the exchequer.

Value-added taxation is based on a taxpayer's consumption of goods rather than his income. More than 160 countries around the world use value-added taxation. Currently five countries, Egypt, Jordan, Lebanon, and Palestinian Territories in the Middle East region have adopted VAT or similar broad based consumption tax system - General Sales Tax (GST).

Recently the largest democratic nation INDIA introduced GST which is almost in line with the global VAT technicalities. India is the 161st country to adopt this system of tax in the world. UAE will be 162nd country to adopt which amphiphilic the acceptability of the taxation structure across the world.

Announcement

The representatives from Ministry of Finance, United Arab Emirates announced the introduction of ValueAdded Tax (VAT) in the country and across GCC from 1st January 2018 onwards. UAE has taken key position in coordinating implementing VAT amongst GCC member states. By agreeing the VAT framework, the treaty act as the basis for the national VAT legislation in each Member State by stipulating certain principle, which must be followed by all the members, while allowing the countries to opt for different VAT treatment.

We are sure that the commitment and the focus of the UAE administration will bring in the best procedural administration system in the country for VAT.

Applicability

Registration is mandatory for all dealers who have a turnover in excess of the threshold determined under the VAT Law. Companies in the UAE that record annual revenues over Dh 375 Thousand will be obliged to register under a Value Added Tax. Companies whose revenues range between Dh 185 Thousand and Dh 375 Thousand will have an option to register voluntarily

It is expected that the standard rate of VAT will be 5%. Some exceptions may apply mainly driven by socioeconomic policy considerations. For example, some items may be subject to VAT at 0% (zero-rated), such as basic food, where no VAT applies, but the related VAT incurred on purchases can be deducted. Other areas such as healthcare and education may be exempted from VAT, where VAT will not apply and the related VAT incurred on purchases cannot be deducted.

Why VAT in GCC

  • New source of income which will contribute to the continued provision of high quality public services in the future with a healthy Government Budget
  • Continually low oil prices have led governments in the GCC to consider alternative revenue sources from tax policy changes.
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How can WE help??

Our competence in the field of VAT in India is rated to be reliable and with foresight. VAT is not a new subject for our firm, the Indian VAT and the latest GST are being handled in many ways for giving advisory and hand holding services to pure clients. The UAE VAT also will not be of any exception. We can extend a hand holding in UAE VAT in

  • Conduct a VAT awareness/ training programme by experts in tax field.
  • Setting internal design and accounting systems to comply with VAT law and its surveillance
  • Groom the employees about the legislature, process, and impact on introduction of VAT
  • Map business cycle and transaction flows to VAT requirements.
  • Support the organization to maintain all the supporting documents including its design under VAT Law.
  • Assess the expected value added tax liability and impact on monthly/ quarterly cash flow.
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Our partners CA Mony and CA Jayaprakesh are leading advisors for many corporates in VAT, GST and are in many consulting groups across the country. They have written a book on the GST titled "HAND BOOK ON HAND HOLDING GST" which is well accepted in India as a comprehensive guide for GST preparedness, documentation, accounting and its implementation.

About Us

The firm Sankar & Moorthy is a Chartered Accountancy firm, formed in 1978 in INDIA and has now completed 38 years of professional service in auditing, taxation, internal audits, system study, accounting and consultancy across various geographical locations.

The focus and thrust in middle east operation is to give a comprehensive solution on feasibility study, internal procedures and documentations, internal control design and surveillance, profitability analysis, cost reduction methods, take over analysis, accounts outsourcing, consultancy etc.

single-staff
Accounting & Taxation
95%
Small Business
85%
Medical Accounting
70%