Wednesday, 1 August 2018

VAT Apply on Pre-Owned Items in UAE

The UAE introduce the New VAT Rules. The rule will apply to any used Pre-Owned Items such as household items, furniture, automobiles, and electronics. Recently the FTA (Federal Tax Authority) announce the news of five percent on the sale and purchase of a used product such as cars and furniture etc.
Anurag Chaturvedi, managing partner, Chartered House said “That product purchased Before on 1st Jan 2018, the customer will have to pay the VAT on full-price but if the product has bought in this year so then the seller can claim VAT only on the profit margin and not on the entire value of the pre-owned product.
Chaturvedi said with an example that is a car dealer bought a car in Dh50,000 in last year. After he sells it in 2018, so the VAT amount on full price, it means the VAT on the entire Dh50,000 amount. But if that car dealer bought the car for Dh50,000 this year from a seller who purchased it after paying VAT and when he sells to a buyer for Dh60,000, so it only pays the VAT only for margin, not the full price.
This rule will apply VAT on pre-owned items in UAE only for household items, furniture, automobiles, and electronics etc.

In another important explanation, Anurag Chaturvedi, managing partner, Chartered House said the FTA has clarified that customers will pay VAT on the regulated banking services such as a loan, and other processing charges as per the recent Central Bank Amendment.
The FTA has clarified that the businesses and person are not required to rework their tax invoices if they were issued before to May 17, 2018, where they used a credible source for reciprocation rates instead of the UAE Central Bank exchange rate.
The same source has been used continuously from January 1 to May 16. But the invoices issued after May 17 has to use the UAE Central Bank exchange rates.

Friday, 1 June 2018

VAT on Online Product Shopping in UAE

Now these time Online Shopping increasing in the Middle East. That is the main reason is to grow the consumers in the Middle East. 73% of the Middle East online consumers made their first online purchase within the past two-three years.“Online shopping trends in the Middle East” that is the fact for the latest online shopping statistics.

The Dubai is famous for the architecture and the Oil-gas industry. While Dubai is focused on the Store and Mall and much of the rest of the UAE has been focusing on building and developing malls and large department stores, online shopping hasn’t been taken advantage of, most of them for trustworthy department stores.

The Dubai is famous for the architecture and the Oil-gas. While Dubai is focused on the Store and Mall and much of the rest of the UAE has been focusing on building and developing malls and large department stores, online shopping hasn’t been taken advantage of, most of them for trustworthy department stores. Recently, the VAT has been introduced in UAE and most of the value is under the VAT now be also discuss on this.

There are a few online stores in UAE, everyone knows the none of them are able to offer trustworthy brands and products, as well as offer the lowest shipping rates possible.

Is online shopping under the VAT?

Recently The Federal Tax Authority (FTA) has confirmed that all purchases made through online shopping portals are subject to the same 5% Value Added Tax (VAT)and purchase made through traditional outlets all VAT for the online shopping. All shopping VAT is to be received from the United Arab Emirates.

The Authority of the Government explained in an awareness flyer issued today that according to
Federal Decree-Law No. (8) of 2017 on Value Added Tax and its Executive Regulations, all online sales are subject to VAT.

After the  VAT launched  The Federal Tax Authority (FTA) has confirmed that all purchases made through the online shopping portals and product are subject to the same 5 per cent Value Added Tax (VAT) as any other purchase made through traditional outlets if the purchased online are receiving within the UAE government.

Tax and its Executive Regulations, all online sales are subject to VAT where a seller’s supplies exceed the mandatory registration threshold of Dh375,000 over the previous 12 months or the coming 30 days.

Friday, 30 March 2018

Guide To UAE VAT Registration Process

 Guide To UAE VAT Registration Process

VAT in UAE Introduced from 1st Jan 2018. In this blog, we have discussed filling VAT Registration process in UAE.

FTA has urged at businesses to register for the VAT before April 30, to defer last-minute hassles.You can download the PDF of Federal Decree-Law No.(8) of 2017on Value added TAX.

Federal Decree-Law No. (8) of 2017

The requirement of UAE VAT Registration process :

  1. Compulsory Registration for business those gross salary is more than AED 375,000.
  2. Voluntry Registration for business Whose turenover is between AED 187,500 & AED 375,000.
  3. Startups business whose VAT overage expenses are more than AED 187,500.

Important Document for UAE VAT Registration process :

Required Document for Registration :

  • Copy of Business License
  • Passport copy of Owner/partners
  • Emirates ID of Owner/partners
  • Memorandum of Federation (MOA)
  • Details of Company’s Bank Account and IBAN
  • Details Business Turnovers such as on Balance Sheet, Audited Reports or Bank Statements for the last 12 months 
  • Registration code of Customs Authority

Some other Details for VAT Registration process:

  1. Address and P.O. Box number for Company's registration
  2. advanced income and expenditure for the next 30.
  3. Details of Busines Activities like Import/Export or Trading.
  4. Names of all GCC countries if doing business with them.
  5. Name of Tax Group if want to one tax group number for all the entities.

UAE VAT Registration Process:

Before starting the VAT Registration Process  check  the above-mentioned documents and details 

  • Go to FTA online Portal
  • Sign up for a new account.
  • After successful login, start your registration process.
  • Enter Details and Submit application.
  • After submission, TAX Registration Number (TRN) will be provided to the user.

Businesses will be notified by email and SMS when your TRN is generated. 

Wednesday, 28 March 2018

How to Get VAT Registration Number (TRN) in UAE

The VAT  launched in UAE, After that, some rules have changed in UAE, A person whose turnover more than AED 375,000 should mandatorily for VAT Registration and a person whose gross sales exceeds AED 187,500, is permitted to apply for Voluntary registration.

The person who fills the VAT Registration,  The authority provide a unique number that called the Tax Registration Number and another name is TRN.

The tax registration number is unique VAT number that provides the authority will be able to identify you.

The taxable person who allows a VAT registration number that called the 'Registrant'.The VAT registration in UAE has been 15 digits.The taxable person who has got the VAT registration number, those are derived the UAE VAT Law and the Executive regulations and these documents like VAT returns, Tax Invoice, Tax Credit note and in all other documents.

The better understanding more about the VAT registration number and the knowledge the usage of VAT number, few short FAQson the VAT Registration Number.

How will get a user VAT Registration Number?

When the taxable person fills the VAT Registration and successfully verification, After that, the VAT registration number will be issued.

Who has issued the VAT Registration Number?

VAT Registration number issued by The Federal TAX Authority of UAE after that when your registration application is successfully verified.

How many digits in VAT Registration Number?

It is expected to have 15 digits.

Is it compulsory for the registrant to mention the VAT Number in VAT returns?

Yes, when VAT Return filled it is mandatory for a registrant to mention his VAT

number. Only from the VAT number, the FTA will easy to able identify the taxable person

What type of documents is that registrant required to mention the VAT Number?

It is mandatory to mention the VAT number following document:

  • VAT Return
  • TAX Invoice
  • Tax Credit Note

Some other document is prescribed by the UAE VAT Regulation

When a taxable person want to join a tax group, so that will be issued to him VAT Number?

Definitely Yes, when a taxable person is already registered with FTA, then he will be right of the VAT registration number, that's the reason he can join the tax group. If not, he must submit the VAT registration form and upon submitting, a Tax Identification Number (TIN) will be issued.

Using TIN, he can join the tax group. Remember the important point, the TIN is not a valid TRN, this number issued by the FTA for tax identification purposes only.

Friday, 23 March 2018

What is The Difference Between VAT and Sales Tax ?

Taxes are a source of income for any governments. While there are taxes for a different variety of things that be paid by a variety of people, a possibility is that as a citizen pays at least one tax or another. The Sales Tax and Value Added Tax (VAT) are two such taxes.

A sales tax is also an expenditure tax, just like the VAT. For the general public, there is two type of VAT and there may be no observable difference between how the two types of taxes work, but there are some major differences.

In many other countries, sales taxes are only imposed on transactions include goods. In addition, sales tax is only allowed on the final sale to the consumer. This opposite with VAT which is applied to goods and services and is charged throughout the final sale, including on the supply chain.

VAT is also applied to imports of goods and services Tax so as to ensure that a level  Deliverer field is maintained for domestic providers of those same goods and services. Many countries prefer the VAT over sales taxes for a many of reasons Recently VAT in UAE has been launched on 1 Jan 2018.

Importantly, VAT has contemplated a more sophisticated perspective to taxation as it makes businesses serve as tax collectors on behalf of the government and cuts down on bad reporting and tax evasion.

The Sales Tax and VAT  both are consumer taxes, that means that they have to be paid whenever one purchases a product that is meant to be consumed or used. However, sales tax is a type of direct tax, while VAT is an indirect tax.

That's means, that sales tax is directly applicable and is directly calculated on the selling price, while VAT  calculated indirectly on every stage of manufacturing.

Comparison between Sales Tax and Value Added Tax (VAT):

  Sales Tax Value Added Tax (VAT)
Description A government tax allow for sales of certain goods and services A government tax levied for goods purchased
Type Direct Tax Indirect Tax
Nature Single point tax Multi point tax
Charged on Sales of few goods and services Value added to the product at every stage of manufacturing
Charged to The final customer in the supply chain, the end user The final customer or reseller
Levied by Levied by the Government Levied by the Government
Levied on Total Value Value Added
Calculated on Calculated on the selling price of the product Calculated on the purchase price of the product.
Calculated as A percentage of the taxable price of the sale Calculated on the value that is added to the product at every stage of manufacturing
Calculation Easier, it is simple and easy to calculate. Complicated, as proper accounts should be maintained at each stage of manufacturing for the product

Thursday, 22 March 2018

What Is Taxable Income in UAE and How do VAT Calculation?

These time The VAT Registration has been rampant for the past few months because of Federal Tax Authority (FTA) has to provide the facility that many businesses have been registering now for the value-added tax (VAT). After the FTA provides registration for VAT and starts Excise Tax on their website.

VAT in UAE has been changed the history of the United Arab Emirates (UAE) once it implements the starting of the year. VAT is a consumption tax that has been applied, at each stage, to all the goods and services that are mandated in the VAT Law or the Federal Decree-Law No. 8 of 2017. The VAT has generated the value that is added during the production process.

The VAT Registration businesses have the responsibility of having the reasonable and accurate documentation for the VAT-related affairs, But it's very important that how to VAT Calculation is done.

The failure to do the provisions stipulated in the landmark Federal Decree-Law No. 7 of 2017 or Tax Procedures Law, Federal Decree-Law No. 7 of 2017 or Excise Tax Law, and Federal Decree-Law No. 8 of 2017 or VAT Law, will face deeply penalties.

The formula to Calculate The VAT

The rate of VAT in UAE has been 5%, which is one of the lowest rates in the world. Since the government will not directly to collect the VAT, so the companies are going to charge them to the customers.

Useful Article: Zero Rated Supplies Under VAT in UAE

The formula for Calculating VAT is as follows:

VAT = Output Tax − Input Tax

Output Tax:

The Output tax is simply the VAT collected on selling goods or legislation services to clients.

Input Tax:

Input tax is the VAT that is paid on purchasing raw materials for the above-mentioned goods or services.

How to gather VAT as a Businessman?

All dealer who are confluent in the chain of production, which includes the supply of materials for production or the production process itself, should do the following:

  • Gather the VAT on the sales, which is output tax
  • Protect the amount of VAT that is paid on the purchase of goods, which is the input tax

Subtracting the input tax from the output tax will have the amount that will be paid to the government.

There are conditions wherein businesses can forward an instance to the government for a refund of VAT although not everyone is permitted to do that. In this case, the businesses will act as the government’s tax collectors.

Preparation and Registration as a VAT Collector

It is never an easy task to sense the concept of VAT in one go.

That's the reason why we are offering a free evaluation if you are in need of any help in regards to VAT registration and calculation in UAE.

Wednesday, 21 March 2018

Connected Thinking: VAT in UAE and India

Last many years, The UAE and India have a good relationship and its become to be very strong, mostly in trade and commerce. The relation between two countries has got better with similar laws and regulations implemented by both countries it to possible only both region.

While Value Added Tax(VAT) have talk past in India now India not allow the VAT, The UAE launched the new tax government to drive the economic development of the country.

India first introduced Central Excise (Central VAT) with the objective of levying duty on creative activity. At the beginning limited to raw materials and components, after that, the scope of the VAT was the increase because extended to include capital goods.

Many years, the government announced the introduction of a State VAT in 2005 to levy VAT on sale of goods.

The VAT Rates in India had differed in every state and were based on the type of goods sold. The VAT is multistage Tax which is denoted at each stage of supply of goods which involve sale/purchase.

Every person is required to VAT Register because any person will be earning an annual turnover of more than Rs.5 lacs (around 29,000 AED) by supplying goods.The VAT was taxable both on local as well as an inter-state supply of goods.
Normally, in the UAE VAT was announced at a starting rate of 5% in this year. while not every item under the to the vat, there were a few exceptions including healthcare and education.Besides, only those businesses crossing the defined annual aggregate the turnover threshold was liable to register under VAT.

The companies in the UAE that report a yearly turnover of over Dh375,000 or more were grateful to be registered with the UAE VAT system. Companies whose turnover is around Dh187,500 had the option to register for VAT during the first phase of the VAT Implementation.

VAT Apply on Pre-Owned Items in UAE

The UAE introduce the  New VAT Rules . The rule will apply to any used Pre-Owned Items such as household items, furniture, automobiles...