VAT Short Guide for Companies Registered in the UAE

Updated on Friday 22nd December 2017

As the VAT is expected to come into force in the Gulf Cooperation Council states like Saudi Arabia and the UAE, the companies are urged to set up the formalities before January 2018. The new tax regime comes with several conditions, and companies should consider that penalties will be imposed if the VAT requirements are not satisfied before the end of 2017. For a proper understanding of the implications of the new tax imposed on companies with activities in certain areas, it is suggested to talk to one of our accountants in Dubai. We have also prepared a short guide for companies which will be subject to VAT in 2018.

1. Sectors in which the VAT will be imposed

After long debates in the GCC and with particular directives suggested by the IMF (International Monetary Fund), the financial authorities in the UAE accepted the VAT rate for certain goods and services. Starting with January 2018, the businesses with activities in the trading sector (imports and exports), jewelry, automotive, electronics, and appliances must apply the VAT tax rate of 5% which represents the lowest one internationally. In the oil & gas sector, the prices of particular products at the pump will suffer changes due to the VAT addition. In the real estate sector, the lease and the sale of commercial buildings are subject to a 5% VAT rate. Also, the tourism sector and especially the accommodation field will need to register for VAT.

2. VAT registration in Dubai

Companies with establishments in Dubai must register for VAT purposes before the end of 2017 with the Federal Tax Authority. Even if the registration process is simple, it is good to know that the following aspects are important:

•    apply for the Tax Registration Number (TRN);
•    provide the company’s documents;
•    make the registration with tax authorities via the official website;
•    consider related conditions for VAT registration imposed by the Federal Tax Authority;
•    consider particular fees at the VAT registration.

3.  The tax submission period for specific companies

As the conditions for VAT registration are mandatory, there are certain situations in which firms can expand the period for tax submission. This is available for companies with profits below AED 1 million. Keep in mind that our Dubai accountants can provide you with complete information about the new tax regime which will be implemented in January 2018 or 2019 for certain business fields.

4. VAT exemptions in Dubai

Healthcare, education, transportation, certain financial services, foods and clothing, are exempt from VAT. The same is available for non-profit organizations which will operate in the same conditions without having to consider the value added tax. We also mention that companies in the UAE should perform audits in Dubai as imposed by the law for small, medium and large businesses established by nationals or foreigners.

If you want to know more details about how VAT will be imposed in Dubai, we suggest you contact our accounting firm in Dubai.

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