INTRODUCTION TO VALUE ADDED TAX
Value Added Tax (or VAT) is an indirect tax and also a type of general consumption tax. In a country
which has a VAT, it is imposed on most supplies of goods and services that are bought and sold. The United Arab Emirates published its Value Added Tax decree law on 27 th August 2017, paving the way for the introduction of the indirect tax on 1 st January 2018. VAT is charged at each step of the ‘supply chain’. Ultimate consumers generally bear the VAT cost while Businesses collect and account for the tax, in a way acting as a tax collector on behalf of the government.
VAT is one of the most common types of consumption tax found around the world. Over 150 countries have implemented VAT.
VAT In GCC
The Unified Agreement for VAT was published in the official gazette of one of the member states, Saudi Arabia. The Unified Agreement provides the framework for the operation of VAT across the GCC. Each GCC Member State will implement the framework through legislation and other instruments.
VAT In UAE
VAT will be introduced across the UAE from 1 January 2018. UAE Government has issued ‘Federal Decree-Law No. (8) of 2017 on Value Added Tax’ ( VAT Law) and ‘Cabinet Decision No. (52) of 2017 on the Executive Regulations of the Federal Decree-Law No (8) of 2017 on Value Added Tax’( Executive Regulation), which contains rules, regulation and procedures related to VAT in UAE.
Apart from mentioned law, provisions of Federal Law no 7 of 2017 on Tax procedure and related cabinet decision no 36, 39 and 40 are also applicable.
The Federal Tax Authority (FTA), the government entity responsible for the collection and management of federal taxes, was established in 2016 by the President of the UAE, His Highness Sheikh Khalifa Bin Zayed Al Nahyan, via Emiri Decree 13 of 2016.
Scope Of Tax
As per article 2 of VAT Law, VAT shall be imposed on:
1. Every Taxable Supply and Deemed Supply made by the Taxable Person.
2. Import of Concerned Goods except as specified in the Executive Regulation of this Decree-Law.
CLASSIFICATION OF TAXABLE SUPPLIES
Standard rates supplies: Chargeable at 5%.
For example: local sales of services which are not zero rated and exempted.
Zero rated supplies: Chargeable at 0%.
For example: Export sale of service, providing healthcare facilities.
Exempt Supply: No VAT chargeable at the point of sale.
For example: Supply of bare land, Local passenger transport services.
All Service providers whether registered with free zones or in local area will be covered under VAT levy since they are registered in UAE. Thus, as long as they raise invoice on other entities in UAE, they will be required to comply with VAT. Transactions between free zone entities which are not “Designated Zones” under the law will be covered within VAT ambit and will need compliance with VAT law.
VAT CONSULTING BY QUANTUM AUDITING
VAT WILL BE LEVIED IN THE UAE EFFECTIVE 1 JAN., 2018. QUANTUM AUDITING provides the following services related to VAT:
• VAT REGISTRATION
• IMPACT ANALYSYS
• IMPLEMENTATION PLAN AND ASISTANCE
• POST IMPLEMENTATION ASISTANCE AND MONITORING
• ACCOUNTING & BOOK-KEEPING ADVISORY SERVICES
• VAT ACCOUNTING COMPLIANT-SOFTWARE ASSISTANCE
• MONTHLY VAT AUDIT
• PERIODIC VAT RETURN FILING
Quantum Auditing has been providing professional auditing services in Dubai, UAE since 2011. Ranked as one of the best audit firms in Dubai, UAE, we are geared up to help you with a smooth transition quickly and efficiently to make your business UAE Value Added Tax Compliant.
Tax Experts at Quantum Auditing possess strong expertise in VAT impact analysis and VAT implementation capability. Recognized as the best VAT auditors, GCC VAT experts and best Customs and Excise tax consultants, we can help build a system that will guide you through the process of VAT Registration, understanding UAE tax, VAT impact on your business, VAT implementation plan and assistance with post-implementation monitoring.
With a combined experience of over fifty years globally as best tax advisors, we will guide you through the step by step process of VAT accounting, VAT record keeping, monthly and quarterly VAT Audit and periodic online filing of VAT Returns in Dubai, UAE.