A 2022 Guide to VAT Obligations For Businesses in the UAE
January 2022 marks the fourth year of the introduction of Value Added Tax (VAT) in the UAE. The introduction of VAT has changed the entire regulatory landscape of the UAE, ushering in an era of enhanced compliance. Recently, the government has revealed that the total revenue distributed at the state level in the UAE for VAT has exceeded AED 95.4 billion, from its implementation in 2018 to October 2021. Ensuring VAT compliance has become a necessity for businesses, for which VAT consultants in Dubai have been offering efficient assistance.
In this background, we have decided to shed light on the basic tax obligations every UAE business must know. Businesses that have just registered with the Federal Tax Authority (FTA) for VAT are required to meet a number of tax obligations. Failing to meet the obligations will lead to hefty penalties, which may lead to reputation damage as well as loss of money. The following are some of the key VAT obligations businesses must meet:
Determine the Scope of VAT Registration
Businesses should first determine whether they fall within the scope of VAT in the UAE. Your business must perform VAT registration in the UAE if its total value of taxable supplies and imports have exceeded the mandatory registration threshold of AED 375,000 over the previous 12 months or it expects the supplies and imports to exceed the mandatory threshold in the next 30 days.
A business can also opt for voluntary VAT registration in the UAE if the value of its total taxable supplies and imports have exceeded the threshold of AED 187, 500 in the past 12 months or it expects the value of supplies and imports to exceed the voluntary registration threshold in the next 30 days. In both cases, it is advisable to consult with VAT consultants in Dubai to apply for the registration.
Keep Your VAT Records & Documents
As per Article 2 of the Cabinet Decision (36) of 2017 on Executive Regulation on Tax Procedures, businesses are required to maintain tax records for at least five years. The period of record-keeping for VAT in the UAE may differ depending on the nature of the business. Tax agents in the UAE can help you to comply with the record-keeping obligations. The key records that must be maintained in the UAE are given below:
- Records of all of the company’s supplies and imports of goods & services
- Tax invoices, credit notes, and alternative documents received by the company
- Records of goods & services the company has disposed of or used for activities not related to business such as VAT amounts paid on such goods and services
- Records of goods & services for which no input tax has been deducted
- Records of goods and services exported by the company
- Records of adjustments or corrections made on the accounts or tax invoices
- Records of adjustments or corrections made to accounts or Tax Invoices
Issue Tax Invoices for All Taxable Goods & Services
As per Article (65) of VAT Decree-Law No. (8) of 2017, businesses making taxable supplies are required to issue an original tax invoice and deliver it to the recipient of goods and services. VAT registrant persons making deemed supplies must issue an original tax invoice and deliver it to the recipient of goods and services if available or keep it in the records in case there is no recipient of goods or services. The tax invoice must contain the following data:
- The word ‘Tax Invoice’ (in clear writing)
- Name, address, and the Tax Registration Number (TRN) of the supplier
- Name, address, and TRN of the receiver (if registered)
- The serial or relevant Tax Identiﬁcation Number (TIN) that helps identify the Tax Invoice and its number in any number of invoices –
- Issuance date
- Supply date, if it is different from the issuance date
- Details of the supplied goods or services
- The unit price, quantity or size of supplies, payable VAT rate and payable amount (in AED) for each good or service
- Any offered discount rates
- The total payable sum in AED
- Payable tax in AED with the applicable exchange rate
- If the recipient demands the tax calculation, the invoice must contain said details, as per Article 48 of the Law
Submit Tax Returns on Time
Normally, the FTA allocates three months tax periods (quarterly) for submitting tax returns. However, the Authority can specify shorter or longer periods if it deems it necessary. Tax registrants are required to file their VAT returns in the UAE no later than the 28th day from the end of each Tax Period. Otherwise, they can also submit the return on the following working day in case the original Vat return day falls on a holiday or a weekend. Since the UAE changed the weekends starting from January 2022, you need to assess your tax return dates to ensure compliance. VAT consultants in Dubai can help you file the VAT returns without fail.
Settle your Payable Taxes on Time
VAT registrants in the UAE must settle any payable taxes on the tax return date. Registrants must try to pay the taxes before the due date and avoid delaying payment until the last day. Pushing the payment date may create the risk of any unforeseen circumstances such as a delay from the bank to complete the payment transfer. Tax agents in Dubai can help you to pay the taxes well ahead of the due date.
How can Jitendra Chartered Accountants Help You?
Businesses need to choose the right VAT consultants in Dubai to meet their mandatory tax obligations. Failing to meet the tax obligations such as VAT registration, VAT return filing, issuing tax invoices, setting payable taxes etc. will lead to hefty penalties. Tax agents in Dubai such as Jitendra Chartered Accountants can help you avoid hefty penalties. Jitendra Chartered Accountants (JCA) is a leading accounting and tax provider with more than 20 years of experience. Our highly qualified professionals can guide you on key requirements such as VAT registration, VAT return filing, VAT refund, tax invoices etc.