VAT Filing For Startups In UAE: A Quick Rundown

1. VAT FilingforStart-upsIn UAE:AQuickRundown • WhatisVATReturnFiling? • VATreturnfilingisthesubmissionofVATreturns.VAT-registeredbusinessesinUAEarerequiredin submittingdetailsof transactionsthat arerelevanttoall taxablesupplies. • How do file VATreturns forstart-ups? • WithVATreturnsfiling,thetaxpayer,whichistheVAT-registeredbusiness,isrequiredbytheFederal TaxAuthorityinsummarizingthedetailsofthetotaloutputtaxthatisduebythebusinessaswellas the inputtaxrecoverableby thebusinessforacertaintaxperiod.Theinformationhastobeprovided on timetothetaxauthoritytoavoidpenalties. • AstartupregisteredforVAT,whethermandatoryorvoluntary,hastoprovidespecificdetailstothe tax authorityforVATreturn filing: • VATonsales–thisincludesdetailson sales,adjustments,and outputVAT.Alldetailsofsalesareto be separatedindifferent categoriessuch as: • Zero-ratedsales; • Exemptitems andexports;

2. Sales thatare subject toreverse chargemechanism; • Sales toVAT-registeredbusinesses; • Standardratedsales • VAT onpurchases–detailsofrecoverableinputVATandpurchases aretobefurnished.Thedetails of input VATand purchasesaretobe declared,includingthefollowing: • PurchasesfromsuppliersthatarenotVATregistered; • Purchasesthat areexempt items or zero-rated; • Purchasesmadethataresubject toreversechargemechanism; • ImportsthataresubjecttoVAT,maybedeferredorpaid atcustoms; • Standardrate purchases made locally • Uponfilingthestartup’sVATreturns,thetaxauthoritywillprovideanotificationthatacknowledges thesubmissionofdetailsrequired.Anofficialreceiptcontainingdetailsofthefilinghastobekeptby thestartup. • DetailsprovidedduringtheVATreturnfilingcanbeamendedifthereareerrors;however,thetax authorityhastobeinformed immediately.It isrecommendedtoseek the helpof aregulatedtax specialistwheninformingtheFTAregardingerrorsastheremaybeconsequencestosuchthatneed to be addressed. • TaxPeriod • The taxperiodthatisapplicabletoaVAT-registeredbusinessisthreecalendarmonthsthatendon FTA-setdate.TheFTAcan,atitsdiscretion,identifyaspecifictaxperiodthatisnotthestandardone foracertaingroupofVAT-registeredbusinesses.Inrarecases,abusinessmayberequiredinfiling VATreturnseverysinglemonth.WhereaVAT-registeredbusinessisassignedastandardtaxperiod,it mayrequestforthetaxperiodtoendwith themonththat isrequestedbythebusiness. • VATReturn Submission • TheVATreturnhastobefurnishedtothetaxauthoritytwenty-eightdaysfollowingthedateof the endofataxperiod.WherepaymentisdueontotheFTA,thetaxauthorityhastoreceivesuch • paymentbythedeadlinethesameastheaforementioned.IftheduedatesetbytheFTAfortheVAT returnfilingandthepaymentfallsonanationalholidayorweekend,thedeadlineforVATreturn filing and/ormakingthe paymentwill be extendedto the followingbusinessday. • AlsoRead:Steps ToSucceed WithVATReturn Filing InUAE • VATReturnFillingin UAE • TheFederalTaxAuthorityinUAErequiresdetailsthataresummarized,whichmeansconsolidated detailsareneededforpurchasesorexpenses,sales,inputVAT,aswellasoutputVAT.Inaddition,the detailsaretobesubmittedintheformatthat isprescribedbythe taxauthority. • Itcanbeverydifficultforabusinesstocollect,compile,andreviewallitemsthatarerelevantand necessaryforfilingVATreturns.Withtheassistanceofexperts,thebusinessrunstheriskof

3. committingerrorsand-missingdeadlinesthateventuallyresulttoattractingheftypenaltiesfrom non-compliance. Itis,thus,amustforallbusinesses,includingstartups,toconsultwitharegulatedtaxspecialistin UAE.Theexpertwon’tjusthelpwiththeaccountingofallVATtransactions,butyouwillalsobe provided assistanceinaccuratelyandproperlyfilingyourVATreturnsintheFTA-prescribed format.Callustodayasweprovide afreeinitialconsultationwithourregulatedtaxagentsinUAE. WhatistheVATRateCurrentlyRunning in UAE? IntheUnitedArabEmirates,thecurrentVATrateisfivepercentanditappliesondifferentproducts andservices. Can aBusinessThat is NotRegisteredforVAT File VAT Returns? Thereisnoreason tofileVAT returnsifthe businessisn’tVAT-registered. Inaddition,a business cannotchargeclientsVATifitisnotVATregisteredorifitisstillwaitingforthe businesstogetits applicationapproved.IfyouarewaitingforFTAapprovalonyourregistrationapplication,wesuggest youutilizeinvoicesandsupplythemtoclientsevenwithoutataxregistrationnumber.Youwillfind applicabletransactionsbyyour companytobe eligibleforVATreclaimwhenitisVAT-registered.