Simplifying VAT Compliance in the UAE: A Comprehensive Guide for Businesses 

In recent times, the United Arab Emirates (UAE) and Bahrain have implemented Value Added Tax (VAT) for the first time. For many businesses, ensuring VAT compliance can be a daunting task, often underestimating the time and resources required to align their systems with the new regulations.

At Simply Solved, we specialize in making VAT compliance effortless for businesses of all sizes and across various industries. With our expertise, we offer the following services:

• Preparation and storage of VAT invoices, tax and credit notes, and handling VAT exempt and zero-rated supplies.

• Accurate VAT calculations every time.

• Hassle-free VAT return submissions.

Our suite of fully compliant, flexible, and customizable software solutions is designed to meet the needs of growing businesses like yours. With over 30 years of experience in assisting companies worldwide streamline their accounting and finance functions, Simply Solved stands as the preferred partner in VAT compliance.

Upgrade to Simply Solved today and embark on your journey towards effortless VAT compliance. You'll be glad you did.

If you'd like to speak to a Simply Solved consultant about VAT in the UAE, contact us today.

What is VAT in the United Arab Emirates?

Value Added Tax (VAT) is an indirect tax levied on consumers when they purchase most goods and services. Introduced in the Gulf Cooperation Council (GCC), including the UAE, VAT aims to bolster member countries' economies and generate new revenue streams.

Businesses in Saudi Arabia, Kuwait, the UAE, Qatar, Bahrain, and Oman with an annual turnover of AED 375,000 must comply with the new VAT laws. This involves collecting a standard tax rate of five percent (5%) at each stage of the supply chain for the government.

How Does VAT Work?

Businesses are charged VAT on goods and services they purchase (input tax) and then charge VAT on the goods and services they sell to end-users (output tax). The difference between the input tax and output tax is paid to the government.

The process of VAT in the UAE follows the journey of a product from the supplier to the manufacturer, wholesaler, retailer, and finally, the end-user. Input and output tax are applied at each stage of the supply chain, at a rate of 5%.

When Was VAT Law Implemented in the UAE?

VAT became effective for UAE states on January 1, 2018, significantly altering the business landscape in the Middle East. Dubai and Saudi Arabia were among the first countries to implement VAT registration in the UAE in 2018. However, some countries have deferred implementation until 2019 and even 2021.

Where is VAT Applicable in the UAE?

Currently, Saudi Arabia and Dubai have implemented VAT. Other GCC countries such as Bahrain, Qatar, and Oman have delayed the implementation of value-added tax until 2019. Kuwait is set to implement VAT in 2021.

VAT is charged on specific products, properties, and services. Certain sectors, such as medical fees, education, local and air transport, medicines, private property rentals and sales, and public textbooks, may be exempt from VAT, although these exemptions may vary among member countries.

VAT Registration in the UAE

Company VAT registration is free of charge and can be done online through the FTA’s e-Services portal. To register for VAT online, you will need:

• Applicant details (entity and activity details, trade license(s), and manager details)

• Contact information (address, contact details)

• Authorized signatory documents (including scanned copies of your Emirates ID and passport)

Keep in mind that the complete process may take between 9 and 12 months.

VAT Return Submissions

You must regularly submit a VAT return to the FTA (quarterly or for a shorter period, if the FTA decides so) within 28 days after the end of the tax period. You can pay VAT online through the FTA’s e-Services portal.

To submit accurate returns, you must track all your provisional data for up to five years. To ensure compliance with UAE VAT law, you may need to make adjustments to your accounting systems and processes.

For automatic compliance, use software that is already VAT compliant, regularly updated with any law changes, and allows you to easily calculate VAT.

In conclusion, VAT compliance in the UAE is crucial for businesses to operate legally and efficiently. With Simply Solved's comprehensive solutions and expert guidance, navigating VAT regulations becomes seamless, allowing you to focus on growing your business. Contact us today to simplify your VAT compliance journey.