Is Your Accounting Software UAE VAT Ready?
How GCC VAT PRO VAT software enable your existing ERP
VAT ready?
What is UAE VAT?
The government of UAE has implemented Value Added Tax
from January 1, 2018. The Federal National Council (FNC) approved draft law in
March2017 and the president His Highness Shaikh Khalifa Bin Zayed Al Nahyan approved
it and issued the landmark Federal Law No. 7 in July 2017. The tax procedures
law that received presidential approval is a significant milestone towards tax implementation
in UAE. The law covers procedures of tax, audits, objections, refunds,
collection and obligations. It also include tax registration, tax return,
submissions, payments etc. and existing software in companies are not
compatible to run all these functions efficiently. Therefore, there is a need
for business organisations and individuals to subscribe for VAT compliant
accounting software.
An Overview of UAE VAT
o
UAE VAT started on January 1, 2018
o
The UAE VAT rate is 5%
o
VAT is applicable to all products except
otherwise notified by Article 45 of the Federal Decree-Law no. (8) of 2017 on
Value Added Tax
o
All the UAE companies whose transactions
have exceeded AED 375,000 should mandatorily register under UAE VAT
o
Companies should maintain records for a
minimum of 5 years
o
At
the end of the tax period, tax payers must file for refund within 28 days
FAQ
1. Does
all the products and services included in UAE VAT?
VAT is an indirect tax and it is
applicable to all the goods and services otherwise exempted by law Article 45
of the Federal Decree-Law no. (8) of 2017 on Value Added Tax.
2. What
are zero rated suppliers?
o
Export of goods and services
o
Transporting goods and passengers
internationally
o
Means of transport like trains, tams,
vessels, flights
o
Residential building on their first
sale/rent
o
Aircraft and ships if used for rescue
operations
o
Investment on Gold, silver and other
precious metals
o
Healthcare related products and services
3. What
is exempt?
UAE VAT is not applicable for
exempted goods and services. Supplies cannot recover any VAT on expenses on the
any step of the development of those products. Exemption will be strictly
enforced and monitored as they are exception to normal VAT application.
4. What
are exempt suppliers?
The following suppliers are exempted
from UAE VA and these suppliers are listed in Article 46 of the Federal
Decree-Law no. (8) of 2017 on Value Added Tax.
o
Financial services: life insurance,
reinsurance of life insurance, discount, commission, rebate and considerations
of similar kind.
o
Residential buildings
o
Bare land
o
Passenger transports that run locally
5. What
should businesses consider at the wake of UAE VAT?
Business companies with annual
turnover of more than AED 375,000 are required to register for VAT and should
make sure that their accounting software is VAT ready so that VAT calculation,
collection and submission will be conducted error free. Companies should
subscribe for GCC VAT PRO VAT software so that their accounting software fully
integrates with VAT. Hence, all the core operations including finance, business
management and bookkeeping, human resource etc. be well controlled and overall
development at the wake of UAE VAT will be possible.
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