What is VAT?
How VAT Works?
|Cost||VAT 5%||Total||Selling Price||VAT 5%||Total||Input VAT||Output VAT||VAT Payable=Output VAT-Input VAT|
- In the above example, the manufacturer pays 500 on which 5% VAT is applicable on purchase of raw Material and he sold product to distributor 1000 AED + 5% VAT. So, the Manufacturer needs to adjust Input VAT and Output Vat and balance(Output VAT –Input VAT) i.e 25 AED will be payable to FDA.
- Now, distributors sell Product to Retailer 1500 AED + %vat. Then distributor Pay net payable Vat amount to govt.
- And then retailer sell product to the end customer at 2000AED+5 % VAT.
Now, in this example, the total tax paid by all business supply chain from supplier to retailer is 100 which is the amount of VAT paid by consumer. It means the entire tax is paid by the consumer.
When VAT is Implemented
From the first of January 2018, VAT is introduced in UAE.
- And any Business owner whose yearly income exceeds 375,000 required to fill their VAT enlistment online applications.
- If your taxable turnover, is less than AED 375,000, but more than AED 187,500, you can register for VAT voluntarily.
- However, there are certain supplies such as healthcare and education services, financial services, insurance, sale and lease of residential property and domestic public transportation is either zero-rated or exempted for VAT in UAE.
- Mandatory registration for VAT for all businesses exceeding the VAT registration threshold.
- Filing of periodic VAT returns with the tax authorities (either monthly or quarterly).
- Remitting any VAT payable by a specified date.
- Record keeping in respect of all business transactions:
- Tax invoices
- Debit or credit notes
- Import and export records
- Records of goods/services provided for free or allocated for private use
- Zero-rated or VAT exempt supplies and purchases
VAT Registration Process
- Create an e-Services account with the FTA
- Verify your e-Service account.
- Login to your e-Services account.
- Complete the VAT registration form-The online VAT registration form contains 8 sections
- About the applicant
- Details of the applicant
- Contact details
- Banking details
- Business relationships
- About the VAT registration
- Review and Submit your VAT registration application.
- Review the progress of your VAT registration application.
- If required resubmit the Application.
Elevate Business Solutions VAT Consultancy Services in UAE:
- VAT prospective Accounting & Book Keeping
- Review of Purchase Invoices to confirm the input VAT
- Review of Sales Invoices to confirm it matches with FTA rules and regulation
- Internal VAT Audit
- VAT Return filing assistance
- Assisting with the payment process to FTA
- Ongoing VAT consulting
- VAT training
- VAT Registration & Audit.
- Revenue Report Preparation for FTA submission.
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