It is well known that running a business in the UAE requires VAT compliance in Dubai. For those with small businesses, VAT registration is not always necessary. However, it is important to consider it, especially if your business’s taxable supplies reach the mark of AED 375 000 per year. Companies that go through VAT return filing in Dubai have the ability to hold a better image in front of the authorities.
Fig 1. Vat Compliance – Top reasons why you should be interested in VAT Compliance, Return Filing and Submission in Dubai
Implementing the VAT tax within the UAE is generally considered a reasonable change and it has been made to help both, the general public and the business community. It is believed that the VAT tax will simplify the tax filing process. VAT also reduces the country’s dependency on the fuel industry and filing VAT returns is an important step in maintaining the viability of the VAT system.
Registering for VAT without the assistance of a professional will be a daunting task, therefore, hiring a specialist for VAT Compliance in Dubai is important.
VAT registered businesses submit a VAT return at the end of each tax period to the FTA (Federal Tax Authority). VAT returns include the value of supplies and purchases made during the tax period, by a taxable person. It shows their VAT liability.
Fig 2. Federal Tax Authority – Top reasons why you should be interested in VAT Compliance, Return Filing and Submission in Dubai
Vat returns summarise sales and purchases of the business and the VAT relating to them. Your VAT records should have all the information that you need.
VAT or Value Added Tax is an important tax charged by the government on the added value to products or services before they reach the final consumer. Registering for VAT is mandatory and crucial for all businesses which actively involve the manufacturing and production of goods or services.
Countries in the Middle East such as the UAE have realised the importance of VAT filing, as it has created for itself the reputation of being known as a business hub for the world. Therefore, the countries in the region have decided on a VAT percentage rate of 5%. In order to conduct business here, one must be aware of the various requirements for VAT submission in Dubai.
Why is it Important to Register for VAT ?
Tax registrants in the UAE are responsible for reporting the details or statistics of business supplies to the authorities. VAT return filing in the UAE is a simple process, provided one is thoroughly knowledgeable in the procedures to be followed.
Fig 3. Statistical Reporting – Top reasons why you should be interested in VAT Compliance, Return Filing and Submission in Dubai
Registering for VAT saves administration time and effort. It helps with avoiding the cash flow problems that paying VAT causes. It is important to remember that VAT is paid on an invoice basis.
It is highly crucial that businesses do not take the process of VAT return filing and submission lightly, as it can lead to hefty penalties. Thus, it will serve a business well to remember to take the steps that are necessary, in a timely fashion.
You can save your business administration time if you take the effort of filing at the nearest possible date. You avoid the problems that not paying VAT tax can cause. This can pose significant problems for small businesses.
Why is VAT Return Filing and VAT Compliance so important ?
Fig 4. Why is VAT return filing and VAT compliance so important? – Top reasons why you should be interested in VAT Compliance, Return Filing and Submission in Dubai
VAT return filing lets you know how much VAT is to be paid or recovered from the tax authorities. In most cases, each VAT return is done every quarterly and it assists with tracking the business’ VAT information. VAT is also charged in cases where businesses are involved in business activities with other countries. VAT returns are different from the annual tax returns paid by small company owners, sole traders or people who are self-employed, where the tax is related to declared profits.
During the process of purchasing items or services for a business, you must be charged VAT by your supplier. It is crucial that each VAT purchase should be tracked and a record of it must be maintained.
It is much better to be VAT compliant when going about conducting business abroad, in order to avoid attracting penalties or breaking regulations. It is essential to know what taxes apply to your business when you first begin operating.
Irrespective of the type of VAT registration, all registrants are required to file VAT returns. VAT compliance comes along with some benefits. Most companies will only do business with fellow registered businesses. Complying with the rules and regulations of the law boosts the company’s image. VAT tax is relatively easier to comply with compared to other indirect taxes.
Therefore it is imperative that business entities implement VAT filing processes and become VAT compliant when performing business activities with multi-national companies. Apart from protecting your business and giving you legal assurance, VAT filing gives proof of your business’s existence. It provides you with the upper hand with regard to tax payment and avoiding financial loss.
How do you solve this issue ?
The solution to dealing with the complicated task of filing VAT tax returns and compliance is to hire a tax consultant. Tax consultants will be of great assistance concerning VAT submission in Dubai, in accordance with the various rules and regulations. Tax consultants are industry professionals who possess a thorough knowledge of the subject of VAT.
Fig 5. How do you solve this issue? – Top reasons why you should be interested in VAT Compliance, Return Filing and Submission in Dubai
Up to date information is required in order to make decisions on VAT filing and more. Therefore tax consultants will keep you informed on the procedure and steps to follow. A consultant will provide your business with an understanding of the law and files the VAT returns in a simple and accurate manner.
Before filing VAT returns, the business should prepare a variety of reports and other essential documents of the company. Having the ability to conduct a more in-depth analysis of the business’ activities will allow the company to better guide its future decisions.
Ultimately, VAT tax return filing, compliance and submission are crucial to maintaining the VAT tax system. It poses various benefits for the business filing tax returns as well as the country implementing the process. Following the procedure allows a business to have a better image in the eyes of the authorities and companies are more willing to conduct business with VAT compliant establishments. This is due to the realization that following such rules and regulations are highly beneficial.
Therefore, if one is planning to build a business in the UAE, it is incredibly important to take note of the VAT return filing and VAT-related processes existing in the country. Taking a look at the required terms and procedures is vital to understanding the mandatory steps that your business needs to follow to stay successful.