His Highness Sheikh Khalifa Bin Zayed Al Nahyan, President of the UAE, has issued Federal Decree-Law No. (8) of 2017 for Value-Added Tax (VAT), to implement VAT in the UAE as of January 2018 at a standard rate of 5%. VAT is there on all the goods and services except certain exempted and zero rated goods and services. VAT is a tax on the consumption of goods and services, levied at the point of supply.
REGISTRATION: Who is required to register for VAT?
Every taxable person resident of a member state whose value of annual supplies in the member state exceeds or is expected to exceed the mandatory registration threshold.
The threshold for registration will be:
– Mandatory registration threshold: AED 375,000
– Voluntary registration threshold: at least AED 187,500
Threshold will be calculated as follows: – Total value of supplies made by a taxable person for the current month and the previous 11 months; or – Total value of supplies of the subsequent 30 days. Value of exempted supplies will not be considered for computing the annual supplies
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DID YOU KNOW?
The failure of the taxable person to submit a registration application within the time frame specified in the tax law would be AED 20,000
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GET REGISTERED FOR VAT AND MAINTAIN PROPER RECORDS AND BOOKS OF ACCOUNTS TO AVOID BURDENSOME AND HEFTY ADMINISTRATIVE PENALTIES BY FEDERAL TAX AUTHORITY.
EXAMPLES OF ACTIONS AND OMISSIONS THAT MAY GIVE RISE TO PENALTIES INCLUDE:
- A person failing to register when required to do so;
- A person failing to submit a tax return or make a payment within the required period;
- A person failing to keep the records required under the issued tax legislation;
- Tax evasion offences where a person performs a deliberate act or omission with the intention of violating the provisions of the issued tax legislation.