Now that the government has declared the implementation of VAT in UAE from 2018, there are companies and entrepreneurs who would like to know about the compliance requirements. So, here are the necessary points to be taken note of which would help you understand what your business will be requested to do.
Companies meeting the minimum turnover criteria will be required to get it registered for VAT. A Unique Tax Payer Registration Number will be provided to all the companies registered under VAT. Companies with yearly revenue of 3.7 million dirham are taxable and should be registered under the VAT Law. Companies having annual revenue which is between 1.87 and 3.75 million dirham will have the option to register under VAT either during Phase 1 or later. For Phase 2, no minimum thresholds have been announced by the government yet.
Each and every company in UAE is required to maintain proper financial transaction records. The respective businesses will be responsible in ensuring the fact that financial records of the firm are accurate, updated and trustworthy. These financial records will serve as pieces of evidence to identify if the company is meeting minimum annual revenue criteria and whether it is mandatory for the firm to get registered under VAT. As per the Ministry of Finance in UAE, it is crucial for every company to maintain records of financial transaction even if the body thinks that it won’t be required to get registered under VAT.
The companies will have the right to claim tax credits on all the business related services and goods purchased.
The companies in UAE registered under VAT will be required to prepare formal tax returns on regular interval. According to the Ministry of Finance, it is likely that there will be an online filing of the reports.
The businesses will be needed to charge VAT on all the taxable services and goods sold by them.
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