VAT Compliance

vat compliance

VAT Compliance Services By Awami

The UAE introduced Value Added Tax (VAT) on January 1, 2018, so businesses must follow strict VAT compliance rules. The implementation of Value Added Tax affects every business sector throughout the country, so expert guidance is essential for managing VAT obligations. Our VAT compliance experts at Awami deliver complete VAT solutions to help businesses fully comply with UAE tax regulations.

All businesses operating in the UAE, including startups, SMEs, and multinational corporations, must maintain VAT compliance for operational success. The VAT compliance solutions at Awami are customized to guide businesses through complex tax regulations while optimizing their tax documentation and preventing financial penalties. Our team will take care of your VAT compliance needs so you can concentrate on business expansion.

Why VAT Compliance Is Crucial ?

Implementation of VAT in the UAE has resulted in new tasks for businesses based in the country. Here is why VAT compliance is essential:

01

Avoiding Penalties

To avoid penalties, a business must file its VAT returns on time and pay VAT as required.

02

Efficient Operation

Proper VAT compliance ensures that the processes in your business do not get interrupted.

03

Enhanced Reputation

Tax-compliant businesses are more reliable and credible, thus enhancing their reputation.

04

Access to Refunds

Compliant businesses can claim VAT refunds on purchases, reducing costs and increasing profitability.

Types Of VAT In The UAE

VAT in the UAE is divided into three main categories, each with different implications for businesses:

Standard Rate (5%)

The standard VAT rate is 5%, which applies to most goods and services. Businesses charge 5% VAT on taxable supplies and can claim VAT on related expenses.

Zero-Rated Supplies

There are some products and services that have a zero percent VAT tax. This means that VAT is not charged on these items, but businesses can still claim back VAT on related purchases. Common zero-rated supplies include exports, international transportation, and certain healthcare and education services.

Exempt Supplies

Some goods and services are VAT-exempt, meaning no VAT is charged, and businesses cannot claim VAT on related expenses. Examples of exempt supplies include residential property rental and certain financial services.

vat compliance

VAT Compliance In The UAE: A Step-By-Step Guide

VAT compliance in the UAE involves a series of steps that need to be carefully managed. Below is an outline of the steps you need to take for VAT compliance in the UAE:

VAT Registration

If your business meets the VAT registration threshold, you must register with the FTA. This requires submitting relevant documents, including your trade license, passport copies, and financial records.

VAT Return Filing

Your returns must include details of all VAT transactions during the reporting period & should be submitted within the deadline.

VAT Audits and Health Checks

Regularly audit your VAT records to ensure compliance and identify any issues before the FTA conducts an audit.

Invoicing and Recordkeeping

Maintain accurate records of all VAT-related transactions, including sales, purchases, and VAT amounts paid or collected. Ensure that your invoices include the correct VAT details.

VAT Payment

Pay any VAT liability due to the FTA based on your VAT return filings. Make sure to pay on time to prevent fines or interest.

VAT Refund Claims

If you are entitled to VAT refunds, ensure that all necessary documentation is in order and submit your refund claim to the FTA.

Common Challenges In VAT Compliance In The UAE

  • Understanding VAT Regulations and Updates
  • Accurate Tax Invoicing and Documentation
  • Proper VAT Registration and Deregistration
  • Timely VAT Filing and Payments
  • Handling Input and Output VAT Calculations
  • Managing VAT Refunds and Reclaims
  • Compliance with Audits and FTA Regulations
  • Avoiding Penalties for Non-Compliance

CLARITY FOR EVERY STEP

Find clear answers to common business setup questions, helping you make informed choices and navigate the process with ease.

VAT compliance means your business is following all the conditions as set by the UAE Federal Tax Authority FTA to get registered for VAT and VAT return filing, invoicing, and recordkeeping.

For example, if the annual taxable turnover of your business exceeds AED 375,000, then you must register yourself under VAT. You can apply online with FTA when you send all the documents, such as your trade license, financial statement, and identification details.

Failure to comply with VAT regulations can result in penalties, fines, and interest charges. Penalties may be imposed for late filing of VAT returns, underreporting VAT liabilities, or submitting incorrect VAT information.

Businesses in UAE that are registered for VAT must submit quarterly or monthly VAT returns, according to the size of the business. Usually, a quarterly VAT return applies to businesses when annual taxable supplies are more than AED 1.5 million.

Yes, Awami assists businesses in claiming VAT refunds on eligible expenses. We prepare and submit VAT refund claims on their behalf under the FTA and assist in ensuring timely processing.

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