Shuraa Tax Blog

Category: Value Added Tax

  • VAT Audit in the UAE

    VAT Audit in the UAE

    A VAT audit in the UAE is a formal review conducted by the tax authorities to verify whether a business is complying with the country’s VAT laws and regulations. During a UAE VAT audit, authorities examine financial records, VAT returns, invoices, and supporting documents to ensure that VAT has been correctly calculated, collected, reported, and paid.

    With the UAE’s VAT framework becoming more structured and enforcement-driven, VAT audits have become a routine part of tax compliance. Businesses need to maintain accurate records, follow proper reporting practices, and stay prepared to demonstrate full compliance at any stage of their operations.

    What is VAT Audit in the UAE?

    A VAT audit in the UAE is an official review conducted by the tax authorities to verify whether a business is complying with the UAE VAT law. During a UAE VAT audit, the authorities examine your financial records, VAT returns, invoices, contracts, and accounting systems to ensure VAT has been charged, collected, reported, and paid accurately.

    • In simple terms, a VAT audit in the UAE checks if:
    • You are charging the correct VAT rate (0%, 5%, or exempt)
    • VAT returns are filed on time and with accurate figures
    • Input VAT claims are valid and properly supported
    • Your books and records meet UAE VAT compliance requirements

    The VAT audit in the UAE can be initiated for various reasons, such as routine checks, inconsistencies in VAT returns, large refund claims, or random selection. Businesses are legally required to cooperate and provide requested documents within the specified timeframe.

    Staying audit-ready by maintaining proper documentation and regular VAT reconciliations helps avoid penalties, fines, or disputes during a UAE VAT audit. If needed, professional VAT consultants can support you through the process to ensure smooth compliance.

    Legal Authority of VAT Auditors During a Tax Audit

    During a tax audit, the VAT or Tax Auditor acts as an authorised representative of the Federal Tax Authority and is responsible for examining whether a business is complying with UAE tax laws. Their role goes beyond document checks; they are empowered to take necessary actions to ensure the audit is conducted fairly, accurately, and without obstruction.

    Under the UAE Tax Procedures Law, a Tax Auditor has the legal authority to enter business premises during an audit. In specific situations, the auditor may also temporarily close the premises for up to 72 hours without prior notice. This step is permitted when:

    • There are reasonable grounds to suspect that the taxpayer is involved in tax evasion, or
    • Keeping the business operational could interfere with or obstruct the audit process.

    Throughout the audit, the Tax Auditor may:

    • Request and examine original or copied records, including financial statements, invoices, and VAT returns
    • Inspect inventory, assets, or stock related to the business
    • Seize documents or items, when necessary, solely for audit purposes

    At the same time, the business under audit has clear responsibilities. The taxable person, or their appointed tax agent or legal representative, must fully cooperate with the auditor, provide access to records and premises, and offer reasonable assistance to ensure the audit is completed efficiently.

    In essence, the role of a VAT or Tax Auditor is to safeguard tax compliance while ensuring the audit process remains lawful, transparent, and effective for all parties involved.

    When is a VAT Audit Required?

    A VAT audit in the UAE is usually required when the tax authorities need to verify a business’s VAT compliance. It may not always mean something is wrong; many UAE VAT audits are routine or risk-based checks.

    A VAT audit in the UAE is commonly required in the following situations:

    • Random or routine selection by tax authorities to ensure general compliance
    • Mismatch or inconsistencies in VAT returns, such as errors in output or input VAT
    • Large or frequent VAT refund claims, which often trigger closer review
    • Late VAT return filings or delayed VAT payments
    • Rapid business growth or unusual transaction patterns
    • Third-party reports or data mismatches from suppliers, customers, or banks
    • Non-compliance history, including previous penalties or warnings

    A VAT audit in the UAE can happen at any time, even if your business believes it is fully compliant. Maintaining accurate records, proper invoices, and timely filings is the best way to stay prepared for any UAE VAT audit.

    Benefits of VAT Audit in the UAE

    A VAT audit in the UAE isn’t just about inspections; it’s a smart compliance and risk-management tool that can actually strengthen your business. Here’s how a UAE VAT audit (including a VAT audit in Dubai) works in your favour:

    1. Ensures Full VAT Compliance: Regular VAT audits help confirm that your VAT filings, returns, and records comply with UAE VAT laws, reducing the risk of errors or non-compliance.
    2. Minimises Penalties and Fines: By identifying mistakes early, a VAT audit in Dubai can help you correct issues before authorities flag them, saving you from hefty penalties and late-payment fines.
    3. Improves the Accuracy of VAT Returns: A UAE VAT audit reviews input and output VAT calculations, ensuring accurate reporting and preventing overpayment or underpayment of VAT.
    4. Builds Credibility with Authorities: Businesses that conduct periodic VAT audits in the UAE demonstrate transparency and good governance, which helps build trust with tax authorities.
    5. Identifies Process Gaps: A VAT audit highlights weaknesses in accounting systems, invoicing, or record-keeping, allowing you to improve internal controls and workflows.
    6. Supports Better Financial Planning: With clear insights into VAT liabilities and recoverable VAT, businesses can plan cash flow more effectively and avoid unexpected tax burdens.
    7. Prepares You for Official Inspections: Conducting a VAT audit in Dubai ensures you’re audit-ready at all times, making official FTA audits smoother and less stressful.
    8. Protects Business Reputation: Staying compliant through a UAE VAT audit helps avoid legal issues and protects your brand’s credibility with clients, partners, and investors.

    Records Required to Be Maintained for a Tax Audit in the UAE

    Under Article (78) of the UAE Federal Decree-Law, every VAT-registered business is legally required to maintain proper tax records and make them available to the Federal Tax Authority c(FTA) whenever requested. These records allow the FTA to verify tax compliance, accuracy of VAT filings, and the correctness of tax payments.

    Below is a structured overview of the key records businesses must retain:

    • Supply and Import Records: Detailed records of all taxable supplies made, and goods or services imported into the UAE.
    • Tax Invoices & Supporting Documents (Received): Copies of all tax invoices and approved alternative documents related to goods or services received.
    • Tax Credit Notes (Received): All credit notes and related documents issued by suppliers.
    • Tax Invoices & Supporting Documents (Issued): Copies of tax invoices and alternative documents issued to customers.
    • Tax Credit Notes (Issued): Records of all credit notes issued, along with supporting explanations.
    • Non-Business Use or Disposal Records: Documentation for goods or services disposed of or used for non-business purposes, clearly showing the VAT paid.
    • Input Tax Not Claimed: Records of purchases where input VAT was not deducted, along with reasons for non-claim.
    • Export Records: Evidence of exported goods and services, including shipping and export documentation.
    • Adjustments and Corrections: Details of any adjustments or corrections made to VAT returns, tax invoices, or accounting records.
    • Import and Customs Documentation: Complete records of imported goods, including customs declarations and supplier invoices.

    It’s important to note that this list is not exhaustive. During a tax audit, the FTA has the authority to request any additional records or documents it considers necessary to assess a business’s VAT obligations properly.

    How to Prepare a VAT Audit in the UAE?

    Preparing properly for a VAT audit in the UAE can save your business from penalties, delays, and unnecessary stress. Whether it’s your first UAE VAT audit or a routine check, these steps will help you stay fully compliant.

    Step 1: Keep All VAT Records Organised

    Ensure all VAT-related documents are complete and well-filed for at least 5 years (or 15 years for real estate). This includes:

    • Tax invoices and credit notes
    • VAT returns filed with the authorities
    • Accounting books and ledgers
    • Import and export documents

    Well-maintained records are the foundation of a smooth VAT audit in the UAE.

    Step 2: Reconcile VAT Returns with Accounting Records

    • Cross-check your VAT returns against your accounting system to ensure:
    • Sales figures match the declared output VAT
    • Purchase records align with the input VAT claimed
    • No missing or duplicated entries

    Any mismatch can trigger deeper scrutiny during a VAT audit in Dubai or elsewhere in the country.

    Step 3: Review VAT Calculations and Classifications

    Confirm that VAT has been applied correctly:

    • Standard-rated supplies (5%)
    • Zero-rated supplies
    • Exempt supplies

    Incorrect classification is one of the most common issues flagged during a UAE VAT audit.

    Step 4: Verify Input VAT Claims

    Make sure you’ve claimed input VAT only where allowed. Check that:

    • Expenses are business-related
    • Valid tax invoices are available
    • Blocked expenses (like certain entertainment costs) are excluded

    Clean input VAT claims significantly reduce audit risk.

    Step 5: Check Filing Deadlines and Payment History

    Review whether:

    • VAT returns were filed on time
    • VAT liabilities were paid within deadlines
    • Late penalties or interest (if any) were addressed

    Timely compliance reflects positively during a VAT audit in the UAE.

    Step 6: Prepare Supporting Documents in Advance

    Auditors may request additional explanations or proof. Keep ready:

    • Contracts and agreements
    • Bank statements
    • Customs documents
    • Internal policies related to VAT

    Quick access to documents helps audits conclude faster.

    Step 7: Assign a Point of Contact for the Audit

    Nominate a knowledgeable person (finance manager, accountant, or consultant) to:

    • Communicate with auditors
    • Share documents
    • Answer VAT-related queries

    Clear communication is key to any VAT audit process in the UAE.

    Step 8: Conduct a Pre-Audit Review

    Before the official UAE VAT audit, perform an internal review or seek professional help to:

    • Identify gaps
    • Correct errors
    • File voluntary disclosures if needed

    This proactive step can prevent penalties and strengthen compliance.

    Understanding the FTA VAT Audit Process

    An FTA VAT audit is a structured review conducted by the Federal Tax Authority to verify whether a business complies with UAE VAT laws. Here’s what typically happens, step by step:

    1. Audit Notification From the FTA

    The process usually starts with an official notification from the FTA. This notice informs you about:

    • The audit date and time
    • The audit scope (periods and transactions under review)
    • The documents you need to provide

    In some cases, audits may be conducted with minimal notice, especially if discrepancies are suspected.

    2. Submission of VAT Records

    Once notified, you’ll be asked to submit VAT-related records, such as:

    • VAT returns filed
    • Tax invoices and credit notes
    • Accounting books and ledgers
    • Import/export and customs documents

    These records help the FTA assess whether VAT has been calculated, charged, and reported correctly.

    3. Review and Verification by Auditors

    FTA auditors will examine your documents to check:

    • Accuracy of VAT calculations
    • Correct VAT treatment (standard-rated, zero-rated, or exempt)
    • Validity of input VAT claims
    • Consistency between VAT returns and accounting records

    They may compare multiple data sources to identify mismatches or errors.

    4. On-Site or Virtual Audit (If required)

    Depending on the case, the audit may take place:

    • At your business premises
    • At the FTA office
    • Virtually (via online document submission and meetings)

    Auditors may also interview staff to understand internal VAT processes and controls.

    5. Queries and Clarifications

    During the audit, the FTA may raise questions or request additional explanations. You’ll usually be given a specific time frame to respond. Clear and timely responses can significantly reduce delays and complications.

    6. Audit Findings and Assessment

    After completing the review, the FTA will issue audit findings, which may include:

    • Confirmation of compliance (no action required), or
    • Additional VAT payable, penalties, or interest

    If discrepancies are found, an official tax assessment will be issued.

    7. Right to Clarify or Appeal

    If you disagree with the audit outcome, you have the right to:

    • Submit clarifications or supporting evidence
    • File a reconsideration or appeal within the prescribed deadlines

    This ensures fairness and transparency in the audit process.

    VAT Audit in the UAE: Get Expert Support by Shuraa Tax!

    A VAT audit in the UAE is no longer an occasional event; it’s a core part of the country’s compliance-driven tax environment. Whether it’s a routine UAE VAT audit, a risk-based review, or a detailed VAT audit in Dubai, businesses must be prepared with accurate records, timely filings, and a clear VAT audit checklist to demonstrate compliance.

    Staying audit-ready not only helps avoid penalties but also strengthens internal controls, improves financial clarity, and builds credibility with tax authorities. With proper guidance, a VAT audit in the UAE can be managed smoothly and confidently. For end-to-end support, from preparation and documentation to representation during audits, Shuraa Tax provides expert assistance to ensure your business remains fully compliant and stress-free.

    📞 Call: +(971) 44081900

    💬 WhatsApp: +(971) 508912062

    📧 Email: info@shuraatax.com

  • Common VAT Filing Mistakes in the UAE

    Common VAT Filing Mistakes in the UAE

    VAT (Value Added Tax) has been part of doing business in the UAE since 2018, with a standard rate of 5%. If your business is registered for VAT, you’re required to file VAT returns regularly, and it’s important to do it correctly.

    Filing your VAT accurately isn’t just a formality. Even small mistakes can lead to penalties, fines, or trigger an audit from the Federal Tax Authority (FTA). And let’s face it – no one wants that kind of stress.

    Therefore, here are some of the most common VAT filing mistakes businesses make in the UAE, and more importantly, how you can avoid them and stay on the safe side.

    1. Missing VAT Filing Deadlines

    Many businesses in the UAE get caught up in daily operations and forget one crucial task – filing their VAT return on time. The Federal Tax Authority (FTA) requires registered businesses to file their VAT returns either monthly or quarterly, depending on the tax period assigned to them. If you miss the deadline, you could face a penalty of AED 1,000 for the first late submission and AED 2,000 for each repeat offence within 24 months.

    Late payments are treated separately and come with a 2% immediate penalty, followed by 4% after 7 days, and a 1% daily penalty thereafter (up to 300%).

    How to avoid it:

    • Mark your VAT filing dates clearly on a calendar.
    • Set digital reminders (email, phone, or task managers).
    • Consider hiring a registered tax agent or consultant, such as Shuraa Tax, who can handle timely submissions for you and ensure compliance.

    2. Incorrect Input Tax Claims

    Claiming VAT on business expenses is a common practice, but only if done correctly. Some businesses mistakenly claim input tax on non-recoverable expenses, such as:

    • Business entertainment (meals, events)
    • Personal expenses
    • Passenger vehicles used for personal and business purposes
    • Gifts or employee benefits not directly linked to taxable supplies

    Making incorrect claims can lead to denied refunds, adjustments by the FTA, or even financial penalties for misreporting.

    How to avoid it:

    • Understand the FTA’s rules on recoverable vs non-recoverable VAT.
    • Keep valid tax invoices and receipts for every claim.
    • Maintain clear records linking the expense to your taxable activities.
    • When in doubt, ask a tax expert to review your input VAT claims before filing.

    3. Not Charging VAT Where Applicable

    Some businesses either forget or incorrectly assume that they don’t need to charge VAT on certain products or services. This often happens when they confuse zero-rated, exempt, and standard-rated supplies. For instance:

    • Zero-rated items (like exports and certain educational/healthcare services) are taxable but at 0%.
    • Exempt items (like local public transport and some financial services) are outside the scope of VAT.
    • Standard-rated goods and services must be charged at 5% VAT.

    Failing to charge VAT on a standard-rated supply can result in an administrative penalty for submitting an incorrect tax return, which is AED 3,000 for the first time and AED 5,000 for repeated offenses. In addition, the business will be required to pay the uncharged tax to the FTA.

    How to avoid it:

    • Carefully check the VAT classification of every product or service you offer.
    • Use accounting software that applies VAT correctly.
    • Stay updated with FTA guidelines or consult a registered tax agent to ensure full compliance.

    4. Errors in VAT Return Forms

    Filling out the VAT return form (Form 201) correctly is essential. Businesses often make mistakes by misplacing figures in the wrong boxes, such as reporting sales for one Emirate in another’s box, or not reporting zero-rated and exempt supplies at all. Even if these errors don’t impact the final tax amount, they are considered non-compliant and can lead to penalties.

    Some businesses also forget to include adjustments, such as bad debt relief, credit notes, or reverse charge entries.

    How to avoid it:

    • Review the VAT return form thoroughly before submission.
    • Keep a summary sheet of all sales, purchases, and adjustments for the period.
    • If you’re not confident, let a registered tax consultant handle the filing to ensure accuracy.

    5. Wrong VAT Calculations

    Getting your VAT numbers wrong is more common than you might think—and it can have serious consequences. Some businesses mistakenly calculate VAT on the wrong base amount or apply the wrong rate. Others may misinterpret the difference between VAT-inclusive and VAT-exclusive pricing, leading to underreporting or overcharging customers.

    For example, if a product is priced at AED 1,000 inclusive of VAT, the VAT amount is AED 47.62 (not AED 50). Miscalculating this can affect both your VAT liability and your customer’s invoice.

    How to avoid it:

    • Double-check your pricing models, and know if prices are inclusive or exclusive of VAT.
    • Use FTA-approved accounting or invoicing software that calculates VAT automatically.
    • Reconcile your books regularly to ensure your VAT figures match your actual sales and purchases.

    6. Not Maintaining Proper Records

    The FTA requires businesses to keep VAT-related records for at least 5 years. This includes:

    • Tax invoices and receipts
    • Credit and debit notes
    • Import and export documents
    • Accounting books and ledgers
    • Records of exempt and zero-rated supplies

    Failing to maintain these documents properly or losing them can be problematic during audits or refund claims. The penalties for failing to keep proper records are significant is AED 10,000 for the first offence and AED 50,000 for a repeated violation within 24 months.

    How to avoid it:

    • Store both physical and digital copies of all VAT-related records.
    • Organise records by filing period for easier access.
    • Use cloud-based software or an accounting system with secure backups.
    • Conduct periodic internal audits to ensure all required documents are in place.

    7. Ignoring the Reverse Charge Mechanism (RCM)

    Many businesses in the UAE overlook the Reverse Charge Mechanism (RCM), especially when dealing with imported goods or services. Under RCM, the buyer (not the supplier) is responsible for reporting and paying VAT to the Federal Tax Authority (FTA). This applies when you purchase from foreign suppliers who are not registered for VAT in the UAE.

    If you don’t report these transactions correctly, the FTA may see it as underreporting your VAT liability, which can lead to penalties and interest charges.

    Example: If your business imports software services from a company in the UK, you must declare and pay VAT on that purchase under RCM, even if the UK supplier hasn’t charged you VAT.

    How to avoid it:

    • Understand which of your transactions are subject to RCM (commonly imports of services or goods).
    • Declare both the input and output VAT in your return under RCM (they usually cancel each other out if the input tax is recoverable).
    • Seek advice from a tax consultant if you deal frequently with international suppliers.

    8. Incorrect VAT Registration or Deregistration

    Another common pitfall is not registering for VAT when required—or failing to deregister when you’re supposed to. Businesses must register for VAT if their taxable turnover exceeds AED 375,000 in the last 12 months. Some businesses delay registration, thinking they’ll “wait a bit,” but this delay can result in late registration penalties of AED 10,000.

    On the other hand, if your business is no longer eligible for VAT (e.g., your taxable turnover drops below the threshold), you must apply for deregistration within 20 business days. Failing to do so can also lead to fines.

    How to avoid it:

    • Monitor your turnover regularly to know when to register or deregister.
    • Don’t assume you can delay action; deadlines are strictly enforced by the FTA.
    • Work with a VAT consultant to ensure proper registration and timely deregistration.

    9. Treating Zero-Rated and Exempt Supplies as the Same

    Many businesses confuse zero-rated supplies with exempt supplies, but they are not the same, and treating them alike on your VAT return can lead to misreporting.

    • Zero-rated supplies (like exports, certain healthcare and education services) are taxable at 0%, and you can still claim input VAT on related purchases.
    • Exempt supplies (like life insurance, residential rentals, and local passenger transport) are not taxable, and you cannot claim input VAT on related expenses.

    Mixing these up may result in wrong VAT calculations and incorrect input VAT claims, which could trigger an audit or penalties from the FTA.

    How to avoid it:

    • Know the difference between zero-rated and exempt supplies as per UAE VAT law.
    • Train your accounting team or consult with a VAT expert for correct classification.
    • Review your business activities periodically to ensure accurate reporting.

    10. Failure to Issue a Valid Tax Invoice

    A tax invoice is more than just a receipt, it’s a critical legal document. It must contain specific, mandatory information to be considered valid under FTA regulations. This includes:

    • The words “Tax Invoice” clearly displayed.
    • Your business’s name, address, and Tax Registration Number (TRN).
    • The customer’s details and TRN (if applicable).
    • A clear description of the goods or services.
    • The total amount of the supply, the VAT amount, and the VAT rate.

    Failing to issue a valid tax invoice or credit note can lead to a penalty of AED 2,500 per missing or incorrect document. This also prevents your customers from being able to reclaim input VAT, which can harm business relationships.

    How to avoid it:

    • Ensure that every invoice and credit note template your business uses is fully compliant with FTA regulations.
    • Employ accounting or invoicing software that automatically populates the required fields, reducing the risk of human error.

    How Shuraa Tax Can Help

    Making VAT filing mistakes can cost your business time, money, and peace of mind. But the good news is, most of these errors are easy to avoid once you know what to look out for. Staying on top of your VAT returns and keeping things accurate helps you avoid penalties and keeps your business running smoothly.

    If VAT still feels confusing or time-consuming, don’t worry – Shuraa Tax is here to help. Our team can take care of everything, from VAT registration and VAT filing to audits and expert advice. We offer simple, stress-free VAT solutions for startups, small businesses, and large companies too.

    Need help with VAT in the UAE? Contact Shuraa Tax for a free consultation today. We’ll make sure you’re fully compliant and worry-free.

    📞 Call: +(971) 44081900
    💬 WhatsApp: +(971) 508912062
    📧 Email: info@shuraatax.com

  • UAE VAT on Cryptocurrency Mining

    UAE VAT on Cryptocurrency Mining

    As cryptocurrency continues to disrupt traditional finance, activities such as mining are gaining momentum worldwide, including in the UAE. But with innovation comes regulation. One crucial aspect often overlooked by crypto enthusiasts is taxation. In particular, UAE VAT on cryptocurrency mining has become a topic of growing interest among miners, investors, and businesses.

    So, how does VAT apply to this digital venture? Whether you’re already mining or planning to enter the crypto space, understanding the VAT on cryptocurrency in UAE is essential to stay compliant and financially prepared. Let’s break it down.

    What is Mining of Cryptocurrency?

    Cryptocurrency mining is the process through which new digital coins are created and transactions are verified on a blockchain network. It involves powerful computers solving complex mathematical problems. When a problem is solved, a miner earns a reward in the form of cryptocurrency, such as Bitcoin or Ethereum, and adds a new block of transactions to the blockchain.

    The process helps keep the network secure and decentralised, making it a vital component of most cryptocurrencies.

    When it comes to the UAE VAT on cryptocurrency mining, the tax treatment depends on the nature of the activity:

    • If mining is done as a hobby or personal endeavour, and no direct consideration (payment) is received, it is not subject to VAT.
    • If mining is carried out as a business activity and the miner earns income by providing mining services to others, such as transaction verification for a fee, the activity could be considered a taxable supply under UAE VAT law.
    • In this case, the miner may be required to register for VAT if the taxable turnover exceeds AED 375,000 in the past 12 months.

    Additionally, the reward earned from mining may or may not be subject to VAT, depending on the clarity of the supply and who is paying for the service. The UAE Federal Tax Authority (FTA) assesses this on a case-by-case basis.

    VAT on Cryptocurrency Mining for Own Account

    Cryptocurrency mining for one’s account refers to the process where individuals or entities mine digital currencies solely for their use, not as a service for others or in exchange for any direct payment. In this case, the miner earns new cryptocurrency as a reward for validating blockchain transactions.

    VAT Implications:

    1. Not a Taxable Supply

    Since there is no direct customer and no identifiable consideration for the mining activity, it is not regarded as an economic activity for VAT purposes. Hence, it is outside the scope of VAT.

    2. No VAT on Mining Rewards

    The reward (e.g., Bitcoin or other tokens) received from mining for one’s own account is not subject to VAT, because it is not a payment from a customer in return for a service.

    3. Input VAT Cannot Be Recovered

    Because the activity is outside the scope of VAT, input VAT (on expenses such as electricity, hardware, and software used in mining) cannot be reclaimed.

    4. Subsequent Sale or Use of Mined Cryptocurrency

    • If the mined cryptocurrency is later sold or exchanged, this may be considered a taxable supply.
    • Depending on the jurisdiction, such a transaction could be exempt, zero-rated, or standard-rated, mainly if the crypto is classified as a financial service.

    5. Different from Mining as a Business

    If mining is done as a commercial service for others or generates income from transaction fees, this is considered a taxable supply, and VAT would apply to those earnings.

    VAT on Cryptocurrency Mining on Behalf of Another Person

    When cryptocurrency mining is carried out on behalf of another party—for example, through mining pools or as a paid service—it is considered a taxable supply of services

    VAT Implications:

    1. Taxable Supply

    Since the miner receives payment or compensation (in fiat or crypto) for providing mining services, it is considered an economic activity, and therefore subject to VAT.

    2. Standard VAT Rate Applies

    The income earned from providing mining services on behalf of others is generally subject to standard VAT rates, as determined by local regulations.

    3. Input VAT Can Be Recovered

    Because the activity is taxable, the miner may be able to recover input VAT on costs related to the mining activity (e.g., equipment, electricity, maintenance), provided they are registered for VAT.

    4. Invoicing and VAT Registration

    • If the miner exceeds the local VAT registration threshold, they must register and charge VAT on the services they render.
    • Invoices issued for these services must comply with VAT invoicing requirements.

    5. Jurisdictional Consideration

    • The place of supply rules will determine where VAT is due.
    • In cross-border mining services, reverse charge mechanisms may apply.

    How is VAT Charged on the Receipt of Mining Services?

    The treatment of VAT on cryptocurrency in UAE, particularly on mining services, depends on the nature of the transaction and the parties involved. Under the UAE VAT on cryptocurrency mining, if a business receives mining services from a VAT-registered supplier within the UAE, the supplier charges VAT at the standard rate of 5%.

    However, if the mining services are received from outside the UAE, the reverse charge mechanism applies. This means the recipient in the UAE must account for the VAT as if they had supplied the service themselves. This ensures that VAT on cryptocurrency activities is consistently applied, even for cross-border services.

    The UAE cryptocurrency exemption generally applies to specific transactions involving cryptocurrencies used as a means of payment, where such transactions are treated similarly to transactions involving traditional currencies. However, cryptocurrency mining is often considered a taxable service unless the miner cannot identify the recipient of their service (e.g., mining for block rewards), in which case it may fall outside the scope of VAT.

    Businesses involved in mining should assess whether they are eligible for input VAT recovery based on the nature of their activities and VAT registration status.

    UAE Introduces Groundbreaking VAT Exemption on Cryptocurrency Transactions

    In a significant boost to the digital economy, the UAE Cabinet has issued Decision No. 100 of 2024, introducing a VAT exemption on cryptocurrency transactions. This landmark move eliminates the standard 5% VAT on crypto transfers, conversions, and exchanges, and applies retroactively from January 1, 2018. Businesses and individuals can now reassess their past transactions and potentially recover previously paid VAT through voluntary disclosures.

    This reform is a significant step in the UAE’s ongoing strategy to position itself as a global leader in the blockchain and digital finance ecosystem.

    What Does the New UAE VAT on Cryptocurrency Reform Cover?

    The VAT exemption applies to:

    • Crypto Transfers and Conversions: All digital asset exchanges, conversions, and transactions are now exempt from VAT.
    • Retroactive Adjustments: Entities and individuals who have paid VAT on crypto transactions since 2018 can adjust their prior VAT filings and request refunds.

    Whether you’re a business owner or an individual investor, this exemption reshapes the cost dynamics of dealing in crypto assets across the UAE.

    Impacts on Crypto Businesses: Why It Matters

    Reduced Operational Expenses

    The removal of VAT on cryptocurrency in UAE directly reduces transaction-related costs. Crypto exchanges, decentralised finance (DeFi) platforms, NFT marketplaces, and digital asset managers can now operate more profitably. This cost reduction enables businesses to reinvest in innovation, expansion, and better customer offerings.

    Attracting Global Investment

    The exemption aligns with the UAE’s ambitions to become a premier hub for crypto and blockchain. Dubai and Abu Dhabi, already on the global radar for their crypto-friendly policies, will become even more attractive to international investors and blockchain ventures.

    Simplified Compliance

    Dealing with VAT has traditionally been complex for crypto businesses, especially given the fast-evolving and decentralised nature of the industry. By removing the VAT obligation, the UAE simplifies compliance, allowing companies to focus on growth rather than paperwork.

    Navigating VAT on Cryptocurrency in the UAE

    As the UAE cements its reputation as a crypto-forward nation, understanding the intricacies of VAT on cryptocurrency in UAE becomes more critical than ever, especially for those involved in cryptocurrency mining. Whether you’re mining for personal gain or offering services commercially, the VAT implications vary based on the nature of your activity.

    While UAE VAT on cryptocurrency mining may not apply to personal mining without compensation, it becomes a crucial consideration for business activities and service-based mining. Moreover, with the introduction of the UAE cryptocurrency exemption, the landscape has shifted significantly, offering relief and opportunities for both individuals and businesses operating in this dynamic sector.

    If you’re unsure how these rules apply to your operations or want to ensure compliance while maximising potential refunds, we’re here to help.

    Contact us today for personalised assistance:

    📞 Call: +(971) 44081900
    💬 WhatsApp: +(971) 508912062
    📧 Email: info@shuraatax.com

    Let Shuraa Tax guide you through the complexities of VAT on cryptocurrency and help you take full advantage of the latest exemptions and reforms.

  • Understanding VAT Treatment for Charities in the UAE

    Understanding VAT Treatment for Charities in the UAE

    VAT, or Value Added Tax, was introduced in the UAE in 2018 and is currently charged at a rate of 5% on most goods and services. While charities are traditionally associated with non-profit activities, their operations in the UAE are not automatically exempt from VAT. When charities engage in business activities—such as selling goods or services for a fee, they may be required to register for VAT, charge VAT on taxable supplies, and adhere to standard compliance obligations, including filing VAT returns and maintaining proper records.

    For charities in the UAE, it’s very important to understand how VAT works. Not following the rules can lead to penalties or financial issues. On the other hand, knowing the right VAT treatment can help charities make the most of their funds—such as through VAT refunds or tax-free supplies.

    So, let’s understands VAT on charities in the UAE in a simple and clear way.

    VAT on Charities in the UAE

    Under UAE VAT law, a charity is defined as a “society or association of public welfare not aiming to make a profit that is listed within a Cabinet Decision issued at the suggestion of the Minister.”

    This means that for an organization to be recognized as a charity for VAT purposes, it must:

    • Be established for public welfare and not for profit.
    • Be officially listed in a Cabinet Decision, as recommended by the Minister.

    Only organizations meeting these criteria are eligible for specific VAT treatments applicable to charities.

    Difference Between a Registered Charity and a Non-Profit Organization

    While both registered charities and non-profit organizations (NPOs) operate without the primary goal of making profits, there are key distinctions in the context of UAE VAT:

    • Registered Charity: An organization that is officially recognized by the UAE government, listed in a Cabinet Decision, and meets specific criteria set by the FTA. Such charities may be eligible for certain VAT exemptions or zero-rated supplies.
    • Non-Profit Organization (NPO): An entity that operates on a non-profit basis but may not be officially recognized as a charity under UAE VAT law. NPOs are subject to standard VAT rules and do not automatically qualify for the special VAT treatments afforded to registered charities.

    It’s essential to note that not all NPOs are considered charities for VAT purposes. Only those officially designated by the government receive the associated VAT benefits.

    Conditions to Qualify as a Designated Charity Under the FTA

    To be recognized as a designated charity by the Federal Tax Authority (FTA) and benefit from specific VAT treatments, an organization must meet the following conditions:

    Official Approval:

    The organization must be:

    • Approved by the Ministry of Community Development to carry out charitable activities in the UAE.
    • Established as a charity under a Federal or Emirate Decree.
    • Licensed to operate as a designated charity by an authorized agency of the Federal or Emirate Governments.

    Non-Profit Operation:

    The charity must operate strictly on a not-for-profit basis.

    Funding Sources:

    The primary funding should come from grants or donations, rather than commercial activities.

    Compliance with Authorizations:

    The charity must operate within the terms of any approval, license, or authorization granted by the relevant authorities concerning its charitable activities.

    Meeting these conditions ensures that the charity can access VAT benefits such as zero-rated supplies and input tax recovery.

    VAT Registration for Charities in UAE

    Charities in the UAE are required to register for VAT if they engage in business activities, such as selling goods or services, that result in taxable supplies. The need to register depends on the value of these supplies:

    • Mandatory Registration: If a charity’s taxable supplies and imports exceed AED 375,000 over the previous 12 months or are expected to exceed this amount in the next 30 days, registration is compulsory.
    • Voluntary Registration: If the value of taxable supplies and imports (or taxable expenses) is more than AED 187,500 but does not exceed AED 375,000, the charity may choose to register voluntarily.

    Voluntary registration can be beneficial for charities that incur significant VAT on expenses and wish to reclaim input tax.

    Step-by-Step VAT Registration Process with the FTA

    To register for VAT, charities should follow these steps:

    1. Create an e-Services Account

    Visit the FTA e-Services portal and sign up for an account.

    2. Log In and Access the VAT Registration Form

    After logging in, navigate to the VAT section and select “Register.”

    3. Complete the Registration Form

    Provide accurate details about the charity, including:

    • Legal name and trade name.
    • Contact information.
    • Business activities.

    Financial details, such as turnover and expected taxable supplies.

    4. Upload Required Documents

    Attach necessary documents, which may include:

    • Trade license or equivalent.
    • Passport and Emirates ID copies of the authorized signatory.
    • Proof of business address.
    • Financial statements or records.

    5. Submit the Application

    Review all information and submit the application.

    6. Await Approval and Receive TRN

    The FTA will review the application and, upon approval, issue a Tax Registration Number (TRN). This process typically takes up to 20 business days.

    Once registered, the charity must comply with VAT obligations, including charging VAT on taxable supplies, filing periodic VAT returns, and maintaining proper records.

    VAT Implications for Charitable Activities in UAE

    UAE VAT treatment of charitable activities hinges on whether a benefit is received in return for the transaction. Here’s a breakdown of how VAT on charities applies to various scenarios:

    Free-of-Charge Charitable Activities:

    When a charity provides goods or services without any charge, these are generally considered non-business activities and fall outside the scope of VAT. As there is no consideration received, VAT is not applicable. However, charities cannot reclaim input VAT on expenses related to these free supplies

    Donated Goods and Services:

    Charities often receive donated goods and services to support their activities. If these are used in charitable activities without any charge, they remain outside the scope of VAT. However, if the charity sells these donated items or charges for services, VAT becomes applicable on those supplies. Since the charity did not incur VAT on the donated items, there’s no input VAT to recover.

    Fundraising Events:

    Fundraising events where attendees are charged (e.g., ticket sales, auctions) are considered taxable supplies. Therefore, VAT at the standard rate applies to the amounts charged. Charities must account for VAT on these revenues and can reclaim input VAT on related expenses, such as venue hire or catering.

    Government Grants or Donations:

    Grants or donations provided without any benefit to the grantor are outside the scope of VAT. If the grantor receives any benefit in return, such as research findings or promotional services, the grant is considered a taxable supply and is subject to VAT.

    The fundamental principle is that VAT applies when there is a supply of goods or services in exchange for consideration. Each scenario must be evaluated on a case-by-case basis to determine whether a benefit is received in return for the transaction.

    Input VAT Recovery for Charities in the UAE

    Input VAT refers to the Value Added Tax that charities pay on goods and services purchased for their operations. Under certain conditions, charities can reclaim this tax, effectively reducing their overall expenses.

    To be eligible for input VAT recovery, charities must meet the following criteria:

    • Use for Taxable Activities: The goods or services must be used for activities that are subject to VAT. If the expenses relate to exempt or non-business activities, input VAT cannot be reclaimed.
    • Valid Tax Invoice: A proper tax invoice must be obtained for the purchase.
    • Intention to Pay: There should be a clear intention to pay the supplier within six months from the agreed payment date.

    Special Considerations for Designated Charities:

    Charities recognized as “Designated Charities” by the UAE government may benefit from more favourable VAT recovery rules. However, they must still adhere to specific guidelines and ensure that input VAT is not claimed on expenses related to exempt supplies.

    Zero-Rated Supplies for Charities

    Zero-rated supplies are taxable at a 0% VAT rate, allowing charities to reclaim input VAT on related expenses. Key zero-rated supplies include:

    Educational Services:

    • Nursery, pre-school, and school education provided by recognized institutions.
    • Higher education offered by government-owned or at least 50% government-funded institutions.
    • Related goods and services, such as course materials and school trips.

    Healthcare Services:

    • Preventive and basic healthcare services provided by licensed medical professionals.
    • Medicines and medical equipment approved by the Ministry of Health and Prevention.

    Buildings Designed for Charitable Use:

    • First sale or lease of buildings specifically constructed for charitable purposes.

    International Transportation:

    • Transport of goods and passengers across international borders.

    Charity VAT Exemptions Supplies

    Exempt supplies are not subject to VAT, and charities cannot reclaim input VAT on expenses related to these supplies. Common exempt supplies include:

    • Residential Property Rentals: Leasing of residential properties.
    • Certain Financial Services: Services such as life insurance and specific banking operations.
    • Local Passenger Transport: Transportation services within the UAE, including buses and taxis.

    How Shuraa Tax Can Help

    Understanding how VAT works for charities in the UAE is important to stay on the right side of the law and make use of the tax benefits available. From knowing when to register for VAT to handling donations, fundraising, and claiming back input VAT, there’s a lot that charities need to be aware of.

    That’s where Shuraa Tax can help. We offer simple and reliable VAT support that’s specially designed for charities and non-profit organizations. Whether you need help with VAT registration, staying compliant, or recovering input tax, our experts are here to make things easier. We also provide a full range of tax services in Dubai, including corporate tax registration, VAT filing, bookkeeping, and more.

    Reach out to Shuraa Tax today and let us take care of your tax matters.

  • GCC Countries VAT Implementation

    GCC Countries VAT Implementation

    The Gulf Cooperation Council (GCC) is a group of six countries in the Middle East — Saudi Arabia, United Arab Emirates, Qatar, Kuwait, Oman, and Bahrain. These countries have a lot in common when it comes to their culture, economy, and political goals.

    Historically, GCC economies have heavily relied on oil and gas revenues. However, fluctuations in global oil prices have underscored the need for economic diversification. To reduce their dependence on oil revenue and create more stable economies, the GCC countries decided to introduce Value Added Tax (VAT).

    VAT in GCC is a type of tax that’s added to most goods and services whenever value is added at each stage of production and distribution. It’s a way for these countries to generate revenue and strengthen their economies.

    The UAE and Saudi Arabia were the first to roll out VAT in 2018. Bahrain followed on January 1, 2019, and Oman introduced VAT on April 16, 2021. As of March 2025, Qatar and Kuwait have yet to implement VAT but are expected to do so soon.

    VAT Rates Across GCC Countries

    To create a consistent taxation system across the region, the Gulf Cooperation Council (GCC) signed a unified VAT framework agreement in 2016. This agreement laid the foundation for all member states to introduce and regulate Value Added Tax (VAT) within their territories.

    Here’s a breakdown of the VAT rollout across each GCC country:

    1. Saudi Arabia

    In Saudi Arabia, the standard VAT rate was initially introduced at 5% on January 1, 2018. However, due to economic challenges and the need to increase government revenue, Saudi Arabia raised its VAT rate to 15% on July 1, 2020. This significant hike was implemented as part of the country’s broader economic reform plans.

    2. United Arab Emirates (UAE)

    The UAE introduced VAT on January 1, 2018, at a standard rate of 5%. This rate has remained consistent since its implementation. VAT applies to most goods and services, with certain exemptions or zero-rated provisions for essential sectors such as healthcare and education.

    3. Bahrain

    VAT was introduced in Bahrain on January 1, 2019, at a standard rate of 5%. To further enhance fiscal stability, Bahrain increased its VAT rate to 10% on January 1, 2022. This move aligns with the country’s objective to strengthen its economic framework.

    4. Oman

    Oman was the most recent GCC country to implement VAT, doing so on April 16, 2021, with a standard rate of 5%. Under Oman’s VAT law, registration is mandatory for businesses with an annual taxable turnover exceeding OMR 38,500 (approximately USD 100,000).

    5. Kuwait and Qatar

    Both nations have yet to implement VAT as of March 2025. While discussions and preparations are ongoing, specific timelines for the introduction of VAT in these countries have not been officially announced.

    Universal Principle Across all GCC Jurisdictions

    Despite having different VAT rates and implementation dates, there are some common principles followed across all GCC countries under the GCC VAT Agreement:

    • A standard VAT rate of 5% is applied to the supply of goods and services across all GCC countries, unless specific items are zero-rated or exempted.
    • Taxable persons are entitled to deduct input tax incurred on goods and services used for taxable supplies, promoting neutrality in the tax system.
    • The agreement defines specific rules to determine the place of supply for both goods and services, which is crucial for establishing tax jurisdiction.
    • Member states have the discretion to zero-rate or exempt certain sectors, such as education, healthcare, and financial services, based on their economic policies.
    • Special provisions address the treatment of goods and services traded between GCC member states to facilitate smooth intra-regional commerce.

    How Businesses Can Adapt to VAT Regulations

    Adapting to Value Added Tax (VAT) regulations is essential for businesses operating within the Gulf Cooperation Council (GCC) countries. VAT registration is mandatory for businesses whose annual turnover exceeds the specified threshold in their respective GCC country. For instance, in the UAE, this threshold is AED 375,000.

    1. While specific procedures may vary by country, the general steps for VAT registration in GCC countries include:
    2. Assess if your business meets the mandatory registration threshold. If turnover is below this threshold, voluntary registration may still be an option.
    3. Gather necessary documents such as trade licenses, certificates of incorporation, and financial statements.
    4. Most GCC countries offer online portals for VAT registration. Businesses need to create an account and submit the required information.
    5. Upon successful registration, a unique Tax Identification Number (TIN) is issued, which is used for all VAT-related transactions and filings.
    6. Post-registration, businesses must file periodic VAT returns and maintain accurate records of all taxable transactions.

    Let Shuraa Tax Handle Your VAT Worries

    Introducing VAT in GCC countries is an important step towards building stronger, more stable economies. As VAT continues to impact businesses, it’s crucial for companies to stay updated and follow the rules to avoid any penalties. Getting help from VAT experts or tax consultants in UAE can make the process much easier, from registration to filing and staying compliant.

    At Shuraa Tax, we’re here to make your VAT journey hassle-free. Our friendly and experienced team offers complete support with VAT compliance, corporate tax, and all your tax-related needs. Let us help you keep your business running smoothly and stress-free. Reach out to Shuraa Tax today.

    Frequently Asked Questions

    1. What is VAT in GCC?

    VAT (Value Added Tax) is a consumption tax applied to most goods and services at each stage of the supply chain across GCC countries. It is ultimately paid by the end consumer.

    2. Which GCC countries have implemented VAT?

    Saudi Arabia, UAE, Bahrain, Oman, and Qatar have implemented VAT, with Kuwait expected to follow soon.

    3. What are the standard VAT rates in the GCC?

    The standard VAT rate is 5% in the UAE and Oman, 10% in Bahrain, and 15% in Saudi Arabia.

    4. Who needs to register for VAT in GCC countries?

    Businesses exceeding the mandatory turnover threshold set by each country must register for VAT. Voluntary registration is also available for smaller businesses.

  • VAT on Insurance in the UAE

    VAT on Insurance in the UAE

    Since January 1, 2018, the UAE has implemented Value Added Tax (VAT) at a standard rate of 5%. This tax applies to most goods and services across the country, including the insurance sector. Whether you’re dealing with health insurance, motor insurance, life insurance, or general insurance, it’s essential to understand how VAT affects each of them.

    The way UAE VAT applies to insurance can be tricky because some types of insurance are taxable, while others are exempt. Knowing the difference can save you from unnecessary costs and help you stay compliant with the law. Therefore, we’ll break down everything you need to know about UAE VAT on insurance.

    VAT Applicability on Different Types of Insurances in the UAE

    The Value Added Tax (VAT) system in the UAE mandates that most insurance services are subject to VAT at a standard rate of 5%. However, there are some exceptions, particularly concerning life insurance and certain health insurance policies.

    1. Life Insurance and Associated Reinsurance

    VAT Treatment: Exempt from VAT.

    Life insurance policies, which may cover events such as marriage or childbirth, are exempt from VAT when the recipient is a UAE resident. This exemption also extends to reinsurance services associated with life insurance. However, if the recipient is located outside the GCC implementing states, the services may be zero-rated.

    2. General Insurance

    VAT Treatment: Subject to the standard VAT rate of 5%.

    This category includes various types of insurance:

    • Motor Insurance: Coverage for vehicles against accidents, theft, and other risks.
    • Property Insurance: Protection for real estate properties against damages or losses.
    • Health Insurance: Policies covering medical expenses.
    • Travel Insurance: Coverage for unforeseen events during travel.
    • Marine Insurance: Covers goods, cargo, and vessels transported via sea.

    3. Insurance Related to International Transportation

    VAT Treatment: Zero-rated.

    Insurance services connected to the international transportation of goods and passengers are zero-rated. This means that while these services are taxable, the VAT rate applied is 0%, allowing providers to reclaim any input VAT incurred.

    4. Islamic Insurance (Takaful)

    VAT Treatment: Aligned with conventional insurance counterparts.

    The UAE’s Federal Tax Authority mandates that Islamic insurance products receive the same VAT treatment as their conventional equivalents. This ensures consistency in tax application across different insurance models.

    Takaful, often referred to as Islamic Insurance, is a Sharia-compliant insurance model that operates based on the principles of mutual assistance, cooperation, and shared responsibility. Unlike conventional insurance, which is based on risk transfer and profit-making, Takaful follows a cooperative approach where participants contribute funds into a pool to protect each other against specified risks.

    5. Reinsurance

    VAT Treatment: Exempt from VAT.

    Reinsurance is a financial arrangement where one insurance company (the reinsurer) agrees to cover a portion of the risks assumed by another insurance company (the cedant or primary insurer). This process helps insurers reduce their risk exposure and maintain financial stability, particularly when dealing with high-value or high-risk insurance policies.

    The UAE VAT Law categorizes reinsurance services under financial services that are exempt from VAT. This is because reinsurance is considered a form of insurance transaction that involves risk transfer and financial protection between insurers rather than directly involving end consumers.

    6. Employee Health Insurance

    VAT Treatment: Subject to VAT at 5%.

    Employee health insurance is a common benefit provided by employers to ensure their employees have access to medical care. In the UAE, offering health insurance to employees is mandatory in some Emirates, such as Dubai and Abu Dhabi.

    VAT Application:

    • When companies purchase health insurance policies for their employees, they are required to pay VAT at the standard rate of 5%.
    • The VAT charged on health insurance premiums is generally recoverable as input tax if the employer is engaged in taxable business activities.
    • However, if the health insurance relates to employees providing exempt supplies, the ability to recover input tax may be restricted.

    7. Insurance Intermediaries

    VAT Treatment: Exempt from VAT.

    Services provided by insurance brokers and agents, acting as intermediaries between insurers and insured parties, are exempt from VAT. This exemption applies when they are involved in the negotiation and conclusion of insurance contracts.

    However, commissions or fees charged by insurance intermediaries (agents or brokers) for facilitating general insurance products (e.g., motor, property, health insurance) are subject to VAT at the standard rate of 5%.

    Services related to life insurance and associated reinsurance are exempt from VAT. Therefore, commissions earned by intermediaries for facilitating life insurance policies are also exempt.

    8. Real Estate Insurance

    VAT Treatment: Subject to VAT at 5%.

    Real estate insurance refers to insurance policies that provide protection against financial losses related to real estate properties. This includes coverage for damages, theft, natural disasters, and other risks that can impact the value or usability of the property.

    Businesses purchasing real estate insurance for commercial properties (e.g., office buildings, warehouses) can typically recover VAT as input tax if the property is used to make taxable supplies.

    VAT Registration for Insurance Companies

    Insurance companies must register for VAT if:

    • Their taxable supplies and imports exceed AED 375,000 per year (Mandatory Registration Threshold).
    • They wish to voluntarily register if their taxable supplies and imports exceed AED 187,500 per year but are below the mandatory threshold.

    Insurance companies dealing with general insurance (e.g., motor, property, health) and insurance-related services subject to VAT at 5% are required to register. However, companies dealing exclusively with exempt supplies (such as life insurance) are not required to register for VAT.

    Documents Required for Registration:

    To register for UAE VAT on insurance, insurance companies must provide the following documents:

    • Trade license
    • Certificate of incorporation/registration
    • Passport copies
    • Emirates ID copies
    • Bank account details including IBAN
    • Turnover declaration
    • Other supporting d documents (depending on the nature of the insurance business)

    Input Tax Recovery for UAE VAT on Insurance

    Input tax is the VAT paid by businesses on goods and services purchased or imported for their business activities. Insurance companies can recover input tax paid on their business expenses if they meet the necessary conditions set by the Federal Tax Authority (FTA).

    Conditions for Reclaiming Input Tax:

    • To be eligible for input tax recovery, insurance companies must meet the following conditions:
    • The expenses must be related to making taxable supplies (standard-rated supplies at 5%).
    • For general insurance products (e.g., motor insurance, health insurance), the VAT on related expenses is recoverable.
    • The company must obtain a valid tax invoice issued by a VAT-registered supplier.
    • The invoice must include essential details such as supplier details, VAT registration number, total amount, and VAT charged.
    • Input tax must be claimed within six months from the date of the tax invoice or the date of import.
    • The insurer must be registered for VAT with the FTA.

    Insurance companies often provide both taxable and exempt supplies. For instance, life insurance is exempt from VAT, whereas general insurance is taxable. When both types of supplies are offered, insurers must apply the partial exemption rule to recover input tax.

    How Shuraa Tax Can Assist

    Understanding UAE VAT on insurance is essential for staying on the right side of the law. From general and health insurance to Islamic insurance and insurance intermediaries, ensuring proper VAT registration, input tax recovery, and compliance is crucial to avoid hefty penalties.

    Handling VAT can feel complicated, but Shuraa Tax is here to make it simple for you. Our expert team can help you with everything, from VAT registration and compliance to advice on input tax recovery.

    If you need help making sure your insurance business is fully VAT-compliant, reach out to Shuraa Tax today. We’ll handle the VAT part, so you can focus on serving your clients better.

    Contact us today for personalised assistance:

    📞 Call: +(971) 44081900
    💌 WhatsApp: +(971) 508912062
    📧 Email: info@shuraatax.com

    Frequently Asked Questions

    1. Is there VAT on medical insurance in the UAE?

    Yes, medical insurance (general health insurance) is subject to 5% VAT. However, life insurance is exempt from VAT.

    2. Can the company reimburse the VAT from employee health insurance?

    Yes, companies can claim VAT on employee health insurance if it’s part of a contractual obligation or a legal requirement, such as providing insurance for employees under the UAE labour law.

    3. How do you treat insurance claims under VAT?

    Insurance claims are generally outside the scope of VAT. However, the administrative charges or fees associated with processing claims may be subject to VAT.

    4. Is VAT applicable to reinsurance services in the UAE?

    Yes, reinsurance services are treated like general insurance services and are subject to 5% VAT.

    5. Do insurance brokers have to charge VAT on their services in UAE?

    Yes, insurance brokers charge 5% VAT on their commission or service fees if the place of supply is within the UAE.

  • VAT on Restaurants in UAE

    VAT on Restaurants in UAE

    Implementing VAT on restaurants in UAE has significantly influenced pricing structures, customer spending behavior, and overall financial management in the food and beverage industry. Introduced at a standard rate of 5%, VAT applies to all restaurants, cafes, and catering services, making compliance essential for businesses in this sector. Understanding VAT implications helps restaurant owners adapt their pricing strategies, optimise operational costs, and comply with UAE tax regulations.

    In this blog, we will cover the impact of VAT on restaurants in Dubai, different tax structures, operational changes, customer behavior, and strategies for seamless VAT implementation. Additionally, we will discuss how Shuraa Tax can assist restaurant businesses in ensuring compliance with UAE’s VAT regulations.

    Understanding VAT in the UAE

    VAT is an indirect tax levied on goods and services, including food and beverages sold by restaurants in the UAE. Registered businesses must charge 5% VAT on taxable supplies and remit it to the Federal Tax Authority (FTA). Restaurants must also maintain accurate financial records, file VAT returns, and comply with tax regulations to avoid penalties.

    Key Points to Note:

    • Restaurants must register for VAT if their annual taxable turnover exceeds AED 375,000.
    • VAT is applicable on dine-in, takeaways, and deliveries.
    • Depending on their classification, some food items may qualify for zero-rated VAT or exemptions.

    Impact on Restaurant Pricing

    VAT directly affects restaurant pricing, as businesses must incorporate the 5% tax into their menu prices. Some restaurants absorb VAT costs to maintain competitive pricing, while others pass it on to customers, increasing overall meal prices.

    Pricing Adjustments Due to VAT:

    • Menu Revisions: Restaurants must update menu prices to reflect VAT charges.
    • Competitive Pricing Strategy: Maintaining affordability while ensuring profit margins.
    • Customer Transparency: Clear VAT breakdowns on bills to improve customer trust.

    Operational Adjustments

    Restaurants in the UAE need to adjust their operations to comply with VAT regulations, including accounting practices, billing systems, and inventory management.

    Essential Changes:

    • Tax Invoicing: Every restaurant must issue VAT-compliant invoices.
    • Accounting Systems: Implement VAT-enabled accounting software for accurate financial reporting.
    • Supplier VAT Compliance: Ensure that suppliers also comply with VAT regulations.
    • Employee Training: The Staff must understand VAT policies and tax calculations.

    Financial Management and Planning

    Proper financial planning is essential to mitigate VAT’s impact on cash flow. Restaurants should develop VAT strategies to ensure smooth financial operations.

    Effective Financial Planning Strategies:

    • Regular VAT Return Filing: Avoid penalties by filing VAT returns on time.
    • Cash Flow Management: Plan finances to account for VAT payments.
    • Input VAT Recovery: Claim VAT refunds on business expenses where applicable.

    Customer Spending Behavior

    VAT influences customer spending patterns, as increased menu prices may lead to changes in dining habits. Restaurant owners must understand how pricing shifts affect consumer decisions and strategise accordingly.

    How VAT Impacts Customers:

    • Price Sensitivity: Customers may opt for budget-friendly dining options.
    • Discount Strategies: Offering VAT-inclusive deals to attract diners.
    • Loyalty Programs: Encouraging repeat customers with reward-based incentives.

    Optimising VAT Implementation in the Restaurant Industry

    To successfully navigate VAT implementation, restaurant owners must adopt effective strategies that ensure compliance while maintaining business profitability.

    Proactive Approaches:

    • VAT Registration: Ensure timely VAT registration with the FTA.
    • Proper Bookkeeping: Maintain VAT-compliant financial records.
    • Customer Communication: Clearly display VAT-inclusive pricing.
    • VAT Consultancy Services: Seek expert guidance from VAT professionals like Shuraa Tax.

    VAT Impact on Restaurants in the UAE

    The introduction of VAT in the UAE has led to several changes in the restaurant industry, including operational cost adjustments and financial restructuring.

    Key Impacts:

    • Higher Meal Costs: A direct increase in restaurant bills.
    • Compliance Burden: Extra administrative work for tax filing.
    • Industry-Wide Adjustments: A shift in marketing and pricing strategies.

    Different Tax Patterns for Restaurants in the UAE

    VAT regulations in the UAE categorise restaurant services into different tax patterns based on supply type.

    Tax Categories:

    1. Standard Rate (5% VAT): This applies to most restaurant sales.
    2. Zero-Rated VAT: Exported services or food deliveries outside UAE.
    3. Exempt Supplies: Some educational or healthcare-related food services.

    Understanding these patterns helps restaurant owners make informed tax-related decisions and optimise their financial strategies.

    How Shuraa Tax Can Help

    Navigating VAT regulations can be challenging for restaurant owners. Shuraa Tax provides expert VAT services to help businesses stay compliant and optimise tax strategies.

    Our Services Include:

    • VAT Registration & Filing: Ensuring timely compliance.
    • VAT Accounting & Record-Keeping: Managing tax-efficient bookkeeping.
    • VAT Consultancy: Personalized tax solutions for your restaurant.
    • Tax Audit Support: Assisting with FTA audits and compliance checks.

    Contact Shuraa Tax Today!

    For expert VAT services customised to your restaurant’s needs, get in touch with us today:

    📞 Call: +(971) 44081900
    💬 WhatsApp: +(971) 508912062
    📧 Email: info@shuraatax.com

    Conclusion

    Understanding VAT on restaurants in UAE is crucial for business owners to stay compliant and manage financial operations efficiently. The 5% VAT on restaurants in Dubai has impacted pricing strategies, operational expenses, and customer spending behaviors. By implementing the right VAT strategies and seeking professional guidance from Shuraa Tax, restaurant businesses can ensure compliance and financial stability.

    If you need VAT Services for Restaurants in Dubai, contact Shuraa Tax today for expert assistance!

  • VAT on Gold in UAE

    VAT on Gold in UAE

    The recent changes in VAT on Gold in UAE have created a dynamic shift in the gold, diamond, and precious metals market. To make the UAE a global hub for gold trading, the government has introduced a VAT exemption specifically targeting registered businesses trading gold within the UAE. This VAT exemption enhances the financial appeal of trading in gold and aligns with the UAE’s long-term economic vision. With reduced costs, trading and investing in gold have become significantly more attractive, positioning the UAE as one of the top global destinations for gold trade.  

    This guide explores everything you need about VAT on gold in the UAE, including the recent updates, eligibility criteria, compliance requirements, and tips for navigating this new landscape.

    Understanding Gold VAT in UAE: What Are the Recent Changes? 

    VAT, or Value Added Tax, is typically applied at a standard rate of 5% on goods and services in the UAE. However, the new VAT exemption for gold, platinum, and silver transactions between registered businesses aims to boost the volume of gold trades and establish the UAE as a premier location for precious metals trading. This exemption applies only to business-to-business transactions, not to end-consumer purchases.  

    For those involved in gold trading, eliminating gold VAT in UAE on gold purchases in business settings presents a unique opportunity to maximise profitability while reducing operational costs. 

    Key Benefits of VAT Exemption on Gold VAT in UAE 

    The VAT exemption on gold transactions within the UAE has broad advantages for businesses and the national economy: 

    1.  Enhancing Market Attractiveness: Removing VAT for registered businesses makes trading in gold and other high-purity precious metals more appealing. 
    2. Encouraging High-Volume Trades: By reducing transaction costs, the UAE’s gold market could increase trading volume, attracting global businesses and investors. 
    3. Supporting Economic Growth: The VAT exemption is part of the UAE’s plan to grow as a leader in the global gold market, directly contributing to the country’s economic progress. 

    Eligibility Criteria for VAT Exemption on Gold Transactions 

    Not all transactions involving gold are eligible for VAT exemption. Specific conditions must be met for the exemption to apply: 

    1. High-Purity Metals Only: This exemption applies to gold, silver, and platinum that meet the minimum purity threshold of 99%. 
    2. Investment-Grade Products: Investment-grade items such as gold bars, coins, or bullion that meet the purity requirement are eligible. 
    3. Registered Businesses: The exemption applies to transactions between VAT-registered suppliers and recipients within the UAE, as the exemption is designed for business-to-business (B2B) transactions. 

    Documentation and Compliance Requirements

    To benefit from the VAT exemption on gold purchases in the UAE, businesses must meet strict compliance standards and maintain detailed records: 

    1. Comprehensive Transaction Records: Businesses must keep clear and accurate transaction records, including VAT invoices, supporting documents, and proof of eligibility for VAT exemption. 
    2. Proof of VAT Registration: Both buyer and seller must be VAT-registered, with supporting documentation to confirm their eligibility. 
    3. Adherence to UAE Tax Laws: Strict compliance with UAE’s tax laws and regulations is essential to avoid penalties and remain eligible for the exemption. 

    Read Also: VAT Registration Process in Saudi Arabia

    Impact on Gold VAT Rate in Dubai and Across the UAE 

    The VAT exemption also extends to importing and exporting eligible high-purity gold, platinum, and silver products, facilitating international trade. Additionally, making Dubai an even more attractive hub for precious metal transactions.  

    This policy reduces transaction costs and improves the UAE’s competitive edge in the global market, further solidifying its status as a preferred location for precious metal trading. 

    Exploring the Gold Market in UAE: Essential Tips 

    Understanding and staying compliant with the VAT exemption policies is crucial for those dealing in gold or considering investments in the UAE’s gold market. Here are some best practices for handling the evolving gold VAT landscape: 

    1. Stay Updated on Tax Regulations: Regulations around VAT on gold in UAE may change over time. Regularly consulting official sources, like the UAE Cabinet or tax advisors, helps ensure compliance. 
    2. Document Compliance: Meeting eligibility criteria and keeping meticulous records are non-negotiable. This ensures that your business practices align with tax regulations, allowing you to maximise VAT exemption benefits. 
    3. Monitor Market Trends: The VAT exemption could influence gold demand and pricing. Stay aware of these dynamics to make informed trading decisions.

    VAT Public Clarification: Gold Jewellery Making Charges 

    In 2022, the Federal Tax Authority (FTA) issued a public clarification (VATP029) detailing VAT application on gold-making charges. This impacts how VAT is handled on services and products in gold jewellery. Businesses need to differentiate between types of supplies. Here’s an overview of the main points: 

    1. Single Composite Supply: If a gold item is sold with making charges included as one price, it’s considered a single composite supply. VAT is applied to the total supply under the Reverse Charge Mechanism (RCM). This applies if: 

    • Gold is the main component, with charges made as ancillary. 
    • The price of gold and making services are combined in one line item. 

    2. Multiple Supplies: If making charges are billed separately, the supplier must apply VAT at the standard rate (5%) on making charges, with the gold component subject to the reverse charge mechanism. 

    3. Exemptions: Gold exports and investment-grade metals that meet specific criteria are not subject to VAT or the reverse charge mechanism, enhancing their appeal in international markets. 

    Understanding the Reverse Charge Mechanism for Gold Items

    The UAE Cabinet Decision No. 25 of 2018 introduced a reverse charge mechanism for certain gold transactions, provided specific conditions are met: 

    1. Recipient Registration: The recipient of the gold supply must be VAT-registered on the transaction date. 
    2. Use of Gold Items: The recipient must use the gold items for production, manufacturing, or resale. 
    3. Supplier Declaration: The supplier must obtain a declaration from the recipient confirming the intended use of the gold items and the recipient’s VAT registration status. 

    If these criteria are met, the recipient is responsible for accounting for VAT on the supply, and the supplier is exempt from charging VAT on the transaction. 

    Single Composite Supply vs. Multiple Supplies 

    When supplying gold along with making services, suppliers must classify transactions as either single composite supplies or multiple supplies: 

    1. Single Composite Supply: If a single price includes gold and making services, the transaction is treated as a single composite supply under the reverse charge mechanism, provided the gold is the main component. 
    2. Multiple Supplies: If making charges are billed separately, they should be taxed at the standard rate, while only the VAT related to the gold may fall under the reverse charge mechanism. 

    Key Points to Remember about Gold VAT UAE Exemptions 

    The key points to remember about Gold VAT UAE Exemptions are as follows: 

    1. The exemption applies to high-purity (99%+) gold items and only between VAT-registered entities in a B2B context.
    2. Compliance with documentation and eligibility criteria is essential to benefit from the VAT exemption.
    3. The reverse charge mechanism applies exclusively to gold items, not to related services like making charges, unless treated as a single composite supply.

    Is there any VAT on gold in UAE? 

    Yes, the UAE applies a 5% Value Added Tax (VAT) on most gold products. However, the VAT treatment depends on the type and purity of the gold: 

    1. Investment-Grade Gold (99% purity and above): VAT is zero-rated for gold bullion and other investment-grade gold products with a 99% or higher purity. This means that while VAT applies at a rate of 0%, suppliers can still recover any input VAT paid. 
    2. Gold Jewelry and Lower-Purity Gold: Gold items not of investment grade, such as jewellery or lower-purity gold, are subject to the standard 5% VAT. This applies to gold items with a purity below 99%, including many decorative and personal-use gold items. 

    This VAT structure was implemented to support the investment market for gold while maintaining revenue on commercial gold products. 

    Conclusion 

    The VAT exemption on gold transactions within the UAE provides an economic boost for businesses and traders, positioning the country as a prime hub for the global gold market. By understanding the new policies, eligibility requirements, and compliance rules, traders and investors can manage this updated gold VAT rate in Dubai and across the UAE, making the most of the potential tax savings. 

    For more detailed information on VAT policies or to explore how your business can benefit, contact us at +971508912062 or info@shuraatax.com

  • VAT on Commercial Property in the UAE

    VAT on Commercial Property in the UAE

    Understanding VAT on Commercial Property in UAE is essential for businesses and property investors operating the UAE’s real estate market. The UAE’s introduction of Value Added Tax (VAT) 2018 significantly changed commercial real estate transactions. VAT is now applicable on the sale, lease, and particular services related to commercial properties.

    Let’s break down the basics, making it easy to grasp how VAT affects commercial property dealings, the registration process, and the responsibilities of property owners and tenants.

    What is VAT Registration in the UAE?

    VAT registration is the process that allows businesses to legally collect VAT on taxable goods and services on behalf of the UAE government. Commercial property transactions fall under the VAT regulations and attract a 5% VAT rate. Businesses need to register for VAT if they meet the turnover threshold requirements.

    Types of VAT Registration

    There are mainly two types of VAT registration in UAE, they are as follows:

    1. Mandatory Registration: Required if a business’s taxable supplies exceed AED 375,000 annually.
    2. Voluntary Registration: Available for businesses with taxable supplies or expenses above AED 187,500 annually but below the mandatory threshold.

    Understanding Commercial Property for VAT Purposes

    In the UAE, commercial property refers to any property not intended for residential use. Examples include offices, shops, hotels, warehouses, and factories. Unlike residential property, which is typically VAT-exempt or zero-rated. VAT on commercial property in UAE applies to both sales and leases which makes it crucial for owners and tenants to understand their obligations.

    VAT-Applicable Transactions on Commercial Property

    Understanding VAT on commercial property transactions is essential for businesses to ensure compliance and avoid unexpected costs.

    1. Sales and Leases: Both the sale and lease of commercial property are subject to VAT at 5%.
    2. Related Services: Maintenance, utility charges, and real estate agent fees associated with commercial property also attract VAT.

    VAT on the Lease of Commercial Property in UAE

    Landlords must charge 5% VAT on rent when leasing commercial real estate. The VAT cost typically falls on the tenant, who pays it on top of the rent. For example, if annual rent is AED 200,000, an additional AED 10,000 (5%) would be charged as VAT.

    VAT Registration Requirements for Landlords

    Landlords who lease commercial properties must register for VAT if their taxable income (including rent and related services) exceeds AED 375,000 within the last 12 months. Registered landlords can also recover VAT on associated expenses, such as maintenance and utilities.

    VAT Payment Process for Buying Commercial Real Estate in UAE

    Purchasing commercial real estate in the UAE involves a specific VAT payment process. For transactions involving a commercial property sold by a supplier other than the developer, the buyer must pay the VAT directly to the Federal Tax Authority (FTA) before completing the ownership transfer at the Land Department.

    Steps for VAT Payment on Commercial Property

    The steps for VAT payment on commercial property are as follows:

    1. The buyer pays the 5% VAT to the FTA.
    2. The buyer receives a Payment Transaction Number as proof upon payment.
    3. The buyer provides this to the Land Department to complete the transfer.

    VAT Deregistration for Commercial Properties

    VAT deregistration allows businesses to cancel their VAT registration with the FTA when they no longer meet registration requirements. For example:

    1. A business’s taxable supplies or expenses fall below AED 187,500 annually.
    2. They cease taxable activities.

    To avoid penalties, businesses must apply for deregistration within 20 business days from the qualifying date. All tax dues and returns should be settled before applying.

     Obligations of Commercial Property Owners and Tenants

    Owners and tenants of commercial property have specific responsibilities under UAE VAT law:

    1. VAT Registration: Owners of non-residential buildings must register if taxable supplies exceed AED 375,000 annually.
    2. Record-Keeping: All transaction documents must be maintained for at least five years.
    3. Filing VAT Returns: VAT-registered owners must file tax returns regularly and settle any VAT due.

    How Shuraa Tax Can Help with VAT on Commercial Property in UAE

    Navigating VAT regulations for commercial properties can be complex, but Shuraa Tax provides expertise to simplify compliance. Our experienced team assists with VAT registration, compliance, and deregistration, helping you avoid potential penalties.

    Contact Shuraa Tax today for assistance on VAT obligations related to commercial property in the UAE:

    +971 508912062

    info@shuraatax.com

    FAQs

    Q1. Is VAT applicable on rent-free periods?

    Yes, VAT applies to the entire lease value, even with rent-free incentives. It is calculated based on the total lease term.

    Q2. Can tenants recover VAT paid on rent?

    If the tenant is VAT-registered and uses the property solely for business, they may recover the VAT paid as input tax.

    Q3. What VAT rate applies to mixed-use buildings?

    For mixed-use buildings, VAT is charged proportionally based on the commercial portion of the property.

    Q4. Do landlords need to register for VAT?

    Landlords must register if their taxable supplies, including rental income, exceed AED 375,000 annually.

    Q5. Are there penalties for non-registration?

    Yes, failure to register on time can lead to fines, so timely compliance with VAT obligations is essential.

  • What is the VAT number in the UAE?

    What is the VAT number in the UAE?

    The VAT number in UAE plays a key role in helping businesses operate legally within the country’s tax system. Once a company registers for VAT, it is issued a VAT number, which must be included on invoices and official documents. 

    This number helps track tax payments and makes it easier for businesses to claim VAT refunds when needed. Whether setting up a new business or managing an existing one, knowing how the VAT number works is essential to staying compliant with UAE tax laws. 

    In this blog, we will tell you more about the VAT number in the UAE; continue to read more about it! 

    What is a VAT number in UAE? 

    A VAT number in UAE, often called a Tax Registration Number (TRN), is a unique 15-digit code assigned to businesses registered under VAT. It helps identify the business and track its VAT obligations. The breakdown of the VAT number is as follows: 

    • The first digit is the country code, “9,” representing the UAE.
    • The next two digits specify the type of organisation: “01” for corporations and “02” for sole proprietors.
    • The following three digits represent the business or individual’s Tax Registration Number.
    • The next six digits indicate the registration date of the business for VAT purposes.
    • The final digit is a check digit, calculated using a specific formula to ensure the number’s validity.

    This structure ensures that each VAT number is unique and accurately reflects the registration details of the business or individual. 

    Why is VAT number important in UAE? 

    A VAT number is important in the UAE as it helps to conduct business legally.  

    Without it: 

    • You cannot charge VAT to customers
    • You risk penalties for non-compliance
    • Your business reputation may suffer

    Getting a VAT number lets you legally charge VAT, claim VAT refunds, and avoid significant fines. This number also boosts customer confidence in your business operations. 

    Benefits of VAT number in UAE 

    The benefits of having a VAT number in the UAE include: 

    Legal Compliance 

    A VAT number ensures your business complies with UAE tax laws. It helps to avoid penalties or legal issues. 

    Tax Collection and Reporting 

    It allows businesses to collect customer VAT and report it to the Federal Tax Authority (FTA) as required. 

    VAT Refunds 

    Registered businesses can claim refunds on VAT for business expenses. It reduces their overall tax liability. 

    Improved Business Credibility 

    Having a VAT number increases the credibility and professionalism of your business, especially when dealing with clients and suppliers. 

    Eligibility for Government Contracts 

    Many government contracts require businesses to be VAT-registered. It helps to make a VAT number essential for bidding on such projects. 

    International Trade Facilitation 

    A VAT-registered business can conduct international trade more smoothly, as many global suppliers and partners prefer or require VAT-registered entities. 

    VAT Registration Requirements in UAE 

    To register for VAT in the UAE, you need: 

    • Tax Identification Number: Obtain this with the certificate of incorporation from the Trade Register.
    • Business License: A copy of the trade or commercial license.
    • Passport Copies: For the owner and shareholders.
    • Memorandum and Articles of Association
    • Company Representative Details: Contact information and proof of the registered UAE address.
    • Bank Account Information: Including IBAN.
    • Income Statement: For the last 12 months, if available.
    • Revenue Estimates: Expected revenue, turnover, and expenses for the next 30 days.
    • Import-Export Information: If applicable.
    • Customs Code: Including a copy of the Dubai Custom Code Certificate, if available.
    • GCC Trade Information: Details of trade activities in Gulf Cooperation Council countries.
    • Business History: If available, describe the company’s experience over the past five years.
    • Tax Group Details: If the company is part of a tax group.
    • Identification Papers: For natural persons, including visas.

    These documents ensure compliance and facilitate the VAT registration process. 

    Other VAT Requirements 

    VAT registration is mandatory for businesses with annual incomes exceeding AED 375,000. Companies earning below AED 187,500 may opt for voluntary registration.  

    The main benefit of VAT registration is the ability to claim refunds on VAT paid. VAT returns must be filed electronically either monthly or quarterly, depending on the income level: 

    • Monthly: For companies with annual income over AED 150 million.
    • Quarterly: For companies with annual income below AED 150 million. 

    Non-resident companies or individuals involved in activities in the UAE must also register for VAT. 

    All VAT invoices must be retained for five years. For assistance with VAT registration, local companies can consult our accountants in Dubai. 

    Steps to get a VAT Registration Number in the UAE 

    To obtain a VAT registration number in the UAE, follow these steps: 

    Determine VAT Registration Eligibility 

    Check if your business meets the VAT registration threshold. Businesses with annual taxable supplies over AED 375,000 are required to register for VAT. Voluntary registration is also available for businesses with taxable supplies over AED 187,500. 

    Prepare Required Documents 

    Gather all necessary documents, such as your trade license, passport copies, financial statements, and other documents specified by the Federal Tax Authority (FTA). 

    Register Online 

    Access the FTA online portal and complete the VAT registration process by providing the required details. 

    Pay Registration Fee 

    A non-refundable fee applies for VAT registration, which must be paid during application.  

    Once registered, your business will be issued a VAT registration number, allowing you to charge and report VAT legally. 

    VAT Exemptions in the UAE 

    Certain goods and services in the UAE are subject to a 0% VAT rate, which means they are exempt from VAT. These include: 

    • Exports: Goods and services sold outside the UAE.
    • International Transportation: Services related to transporting goods and passengers internationally.
    • Aircraft and Sea Transport: Services for operating and maintaining aircraft and ships.
    • Investments in Precious Materials: Transactions involving gold, silver, and platinum.
    • Residential Properties: The sale and lease of residential real estate.
    • Education Services: Educational services provided by accredited institutions.
    • Healthcare Services: Medical services provided by licensed healthcare providers.

    These exemptions support key sectors and reduce the tax burden on essential services. 

    Importance of Your VAT Number and How Shuraa Tax Can Help 

    The VAT number in the UAE is crucial for businesses to operate legally within the country’s tax framework. This unique 15-digit code ensures compliance with UAE VAT laws, facilitates accurate tax reporting, and enables companies to claim VAT refunds.  

    Understanding and properly managing your VAT number is essential for staying compliant and benefiting from VAT-related advantages. 

    Whether setting up a new business or managing an existing one, going through the VAT requirements can be complex. Shuraa Tax is here to assist you through every step of the VAT registration process.  

    Shuraa Tax helps you meet all requirements and optimise your tax management. For more information and personalised support, Get in touch today at +971508912062. You can also drop us an email at info@shuraatax.com. 

    Frequently Asked Questions

    Q1. Who issues the VAT registration number in UAE? 

    After verifying your application, the Federal Tax Authority (FTA) issues the VAT registration number. 

    Q2. How many digits make up the VAT registration number? 

    The VAT registration number is a unique 15-digit identifier. 

    Q3. What is the validity period of the VAT registration number? 

    The VAT number remains valid indefinitely if the business maintains its registration status. 

    Q4. Is mentioning the VAT number in VAT returns mandatory? 

    Yes, mentioning the VAT number in all VAT returns is mandatory for identification purposes. 

    Q5. What Happens if You Don’t Have a VAT Number in the UAE? 

    Businesses without a VAT number may face penalties, fines, and legal action by the FTA. 

    Q6. What is the purpose of a VAT number in UAE? 

    The VAT number is used for tax invoicing, VAT returns, and payments, ensuring compliance with VAT regulations. It helps the FTA track VAT collected and verify tax returns. 

    Q7. Can You Check a VAT Number in the UAE? 

    Yes, you can check a VAT number in the UAE through the Federal Tax Authority (FTA) website.  

    Q8. Who needs a VAT number? 

    • Businesses with taxable supplies exceed the registration threshold.
    • Entities engaged in VAT-registered activities (goods or services).
    • Companies wanting to reclaim VAT on expenses.
    • Importers and exporters of goods. 

    Q9. How to Get a VAT Number in the UAE? 

    1. Register on the FTA Portal: Create an account on the Federal Tax Authority website.
    2. Fill in Details: Enter your business name, trade license, and contact information.
    3. Submit Application: Complete and submit your application.
    4. Receive VAT Number: The FTA will issue your VAT number upon approval.

          These steps will ensure your business complies with UAE tax regulations. 

          Q10. Can Freelancers Get a VAT Number? 

          Yes, freelancers can get a VAT number in the UAE. If your freelance business meets the VAT registration threshold and engages in taxable activities, you can apply for a VAT number.  

          This allows you to charge VAT on your services, claim VAT refunds, and comply with UAE tax regulations.