VAT is a consumer indirect tax and general consumption indirect tax, collected incrementally and based on the business’ production and sales. UAE VAT is imposed on sold and bought goods and services. It is where the end-user has to bear the tax in the supply chain system.
With the introduction of VAT in the UAE, it is the goal of the Government to depend less on oil and hydrocarbon products to bring revenue to the country and look for alternatives. It is estimated that VAT will generate billions into the country. Since VAT commenced on 1st of January 2018 how will it impact your business, and what needs to be overseen?
Companies must have proper record maintenance and documentation as indicated by the Federal Tax Authority. For instance, when it comes to raising the invoice the relevant records and documents must be in compliance with UAE VAT. Businesses should keep note of tax credit forms, import of goods and export of goods, supplier agreements, and customer contracts over a period of five years. Businesses should also have correct information of all inventory details for the year 2018. Therefore, it is important to take stock of the inventory and verify the items.
Another important step to VAT registration and implementation for small and medium-size businesses is to maintain a proper accounting system. Good accounting software will keep the system user-friendly and reliable. Avoid maintaining manual records, and instead, use the services of a tax consultant in Dubai to ensure that proper accounting procedures are followed to complete VAT registration in Dubai as well as in the instance of filing VAT return to comply with VAT regulations in the UAE.
Registered businesses will have to file for VAT returns and make payments by the deadline. VAT returns are important as these records can be used for auditing purposes by the FTA.