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  • Impact of UAE VAT on Business-to-Business supplies of Healthcare Services

    Impact of UAE VAT on Business-to-Business supplies of Healthcare Services

    The Federal Tax Authority (FTA) in UAE recently issued a public clarification on business-to-business supplies of healthcare facilities & services. According to it, healthcare services that are necessary to be supplied to patients in need will be subjected to zero-rated VAT in UAE. Below conditions must be fulfilled in order to treat supply of healthcare services at zero rate: –

    • Services must be made by a healthcare body or institution, doctor, nurse, technician, dentist, or pharmacy, licensed by the Ministry of Health or by any other competent authority.
    • Relate to the wellbeing of a human being.

    However, VAT @zero rate on healthcare services is applicable only if the provider is supplying its healthcare services directly to the patient. If in any case, the “recipient of supply” of healthcare services are different people other than end patient then the supply will no longer be qualified as zero-rated and a standard rate of VAT will be charged.

    Let’s understand a little better about VAT implications on healthcare services:

    As per the UAE VAT law, healthcare services are defined as any service supplied that is accepted in the medical profession for the treatment of the patients or “recipient of supply” of the treatment. It also includes preventive healthcare services. The recipient of the healthcare services must be the patient receiving the treatment and if that’s not the case then 5% VAT will be levied on the supply of these services. As a result of this, healthcare providers need to make sure who is on the receiving end of the treatment to determine if the supply shall be zero-rated, else a standard rate of VAT will be charged.

    Here are some of the examples of different health scenarios to help you better understand under what conditions will the supply of healthcare services be zero-rated. Each supplier of healthcare services should consider the VAT rules while supplying their healthcare services.

    1st situation: A doctor has contracted with the hospital to provide its healthcare services to the patient within the hospital premises. This will involve two kinds of supply/transaction situation-

     A) Supply by the doctor to the hospital: The doctor is seen supplying its services to the hospital and not directly to the patient. Even though it’s related to the health of patients, it won’t be treated as “healthcare services” taxable at zero rate. Now, as the doctor has contracted with the hospital to provide its services to the patients, the services will be subjected to 5% UAE VAT

     B) Supply by the hospital to the patients: The hospital is supplying its healthcare services directly to the “recipient of supply” of the services. Therefore, these are subjected to zero-rated VAT.

    1. A hospital suggests a laboratory to a patient for conducting its medical test. As a result, the patient enters into a separate and direct contract with the laboratory for the supply of medical tests. Because the laboratory is directly supplying its services to the “recipient of the supply” it will be subjected to zero-rated VAT as per the UAE VAT laws.
    2. A hospital needs to perform a specialized test/procedure on its patient and therefore enters into a contract with another hospital to perform the test/procedure. It will involve two different supply situations:

     A) Supply of services by hospital 2 (specialist hospital) to hospital 1: The hospital 2 is supplying its specialist healthcare services to hospital 1 and not the patient directly so the cannot be marked as “zero-rated”.

     B) Supply of services by hospital 1 to the patients: Hospital 1 is treating the patient directly so the supply of services from it to the patient will be constituted as a part of the definition of “healthcare services” as defined by UAE law of VAT and therefore will be treated as “zero-rated”.

    To get the best tax consultants in UAE contact Shuraa Tax Consultants and Accountants which is the leading tax agency of Dubai. Their team of dedicated experts promise to resolve all VAT related queries of various businesses. Speak to our tax agents and consultants and get professional guidance and support on managing taxation and VAT issues at affordable rates. Contact us today:

    Email: info@shuraatax.com

    Phone: +971 508912062

  • Refund Policies for VAT levied on goods and services

    Refund Policies for VAT levied on goods and services

    The Federal Tax Authority (FTA) of the UAE made an official declaration regarding the refund scheme for VAT paid on goods and services connected with Expo 2020 (20 October 2020 to 10 April 2021) in Dubai. The Bureau Expo 2020 is a governing body responsible for taking care of the VAT refund procedure.

    According to the statement released by the FTA, an official participant (any country or intergovernmental organization) holding a valid Expo trade license number will be eligible for a VAT refund under the following conditions:

    1. The participant has no intention of using more than 20% of the exhibition space
    2. It does not use the space for unofficial or commercial purposes at the Expo 2020.

    Eligibility for the VAT Refund

    An official participant can claim the VAT incurred on the supply or imports of goods and services used in-

    1. Constructing, installing, altering, decorating and dismantling of their exhibition space 
    2. Operating their exhibition space and any kind of presentation at the Expo 2020 site
    3. Connection with the actual operation of the official participant’s office, given that the value of goods and services that are claimable is not less than the limit set by higher authorities. 
    4. Relation to the personal use by the official participant’s Section-Commissioner-General, Section Staff and the Beneficiaries. 

    The official participants irrespective of their registration for VAT have to obtain the Certificate of Refund Entitlement from the Bureau to claim the refund. Also, they cannot sell or transfer the goods and services on which the refund is to be claimed to other parties free of charge without the consent of FTA’s and Bureau’s established law and; without paying the taxes. The Bureau Expo receives the refund claims from the official participants, and if found correct, has to initiate a request to the FTA to refund the VAT amount. 

    Conditions for VAT Refund

    Any person or official participant who is eligible for claiming the VAT refund should be well versed with the procedures and verification requirements as set by two of the most important authorities- FTA and Bureau Expo 2020. In case an official participant does not fit the criteria of eligibility for claiming the VAT refund, the participant shall inform the Bureau about the same. 

    Powers of the Federal Tax Authority(FTA)

    FTA has the power to review or audit any action or activity of the Bureau Expo and make sure that the rules and procedures are being followed by all the official participants and the Bureau. If it finds any claim violating its set rules, it can cancel the ongoing VAT refund procedure. 

    Get in touch with Shuraa Tax Consultants and Accountants to know more about the VAT Refund scheme as set under Expo 2020 Dubai. We are a group of certified tax agents and consultants who promise to hear all your queries and concerns related to finance and taxes.

  • VAT Implications on Independent Director fees

    VAT Implications on Independent Director fees

    The fees charged by independent Directors to the Companies are subject to VAT in UAE. Independent Directors who provide managerial services to Companies and where their annual revenue exceeds the VAT registration criteria in UAE, such independent Directors must apply for VAT registration and should comply with UAE VAT regulations.

    The Federal Tax Authority (FTA) has levied certain VAT implications on the fees of Independent Directors of Companies. It mandated a basis for accounting VAT for the registered members providing independent Director’s services to Companies. According to which the date of supply for VAT concerning the independent Directors’ services is determined either as per the general laws or special laws of date of supply. The date of supply is greatly determined by whether the Director’s fee is known from the outset or not.

    When the Director knows the fees from the outset, the date of supply shall be determined based on Article 25 or 26 of Federal Decree-Law No. (8) of the year 2017 on Value Added Tax.. While in case such fees are not known from the outset, they shall be determined upon the conclusion of the Annual General Meeting and only then the date of supply shall be known. These could be classified as three conditions for determining the date of supply for the Director’s fees.

     With Shuraa’s excellent consultancy services and guidance, let’s understand it in a more detailed format.

    Independent Director unaware of the fee at the outset and gets to know only after the conclusion of the Annual General Meeting

    In certain cases, to know the Director’s fee, it’s possible only upon the conclusion of the Annual General Meeting. It’s after this point that attempts can be made to determine the Independent Directors’ fees and only then the date of supply shall be triggered. As the Director is not able to issue an invoice or receive any payment before the date of the conclusion of the AGM, the date of supply for VAT would be that date on which provisions of services may have been completed according to Article 25 of the Federal Decree-Law of the VAT law.

    For FTA, the Director’s services seem to be completed only when the fees are known to the Directors which is after the AGM’s conclusion, in spite of the fact that provision of services may have been completed earlier. Hence, according to this view, Independent Directors are required to account for VAT only after they know about their fees as only then the date of supply for VAT could be known. As per Article 67 of UAE’s VAT law, the Director is supposed to issue invoices within 14 days of the date of supply, if there is no periodic/ consecutive invoice issuance system.

    Independent Director knows the fee at the outset and periodic payments and invoices are made timely

    When the Independent Director knows its fee and periodic or multiple payments and invoices are made, the date of supply would be determined under Article 26 of the Federal Decree-Law Nos. (8) of 2017 on VAT law, which is earliest of below dates:-

    1. When the tax invoices will be issued
    2. Due date of payment as mentioned in the Tax invoice
    3. The date on which payment is received

     In situations where none of the events take place, the date of supply shall be triggered by the end of 12 months.

    Independent Director knows the fee at the outset but no periodic payments or invoices are made.

    When Directors make no periodic payments or issue any invoices, the date of supply is known as per Article 25 of UAE’s law on VAT according to which the date of supply would be determined at the earliest of:

    1. Date of issue of the tax invoice
    2. Date of payment receipt
    3. Date when the provision of services was completed

    Enquire now for more updates with Shuraa Tax Consultants and Accountants. Get easy and affordable tax consultation and advice from the best professionals in the industry. VAT Dubai Independent director fees.

  • What is an Input Tax and how you can recover it?

    What is an Input Tax and how you can recover it?

    Input tax is the tax that a taxable person pays or a business on the purchase of various good or services or while during imports related to taxable supplies. E.g., a shopkeeper purchases goods from a wholesaler and pays tax for the same. The Federal Tax Authority (FTA) in the UAE has special provisions in place for Input Tax recovery.

    Input Tax recovery refers to the amount repaid by the FTA to all taxpayers who fulfill the conditions for Input Tax Recovery. According to UAE VAT provisions, a taxable person can reduce the value of eligible input tax from the total tax payable and pay only the balance amount as output tax. It is important as it has an impact on the current cash flows and ongoing expenses incurred by a Company during the financial year.

    Conditions to follow for Input Tax Recovery

    Only VAT registered businesses or a person is eligible for Input tax recovery in the UAE. All the non-tax registrants are ineligible for claiming the input tax recovery. It is mandatory to meet the following conditions for input tax recovery.

    Only taxable supplies are eligible for Input tax recovery

    An important condition for input tax recovery is that it is valid only in connection with taxable supplies. This refers to the supplies on which UAE VAT is levied. One cannot claim input tax related to the exempt supply as they are invalid for input tax recovery.

    Recipient of the input tax recovery to obtain and secure the tax invoice

    Tax invoices contain details of those supplies on which input tax recovery claim is made. The receiver must maintain proper tax invoices for reference as well as maintaining records. This practise is important when claiming input tax recovery on supply. Additionally, the tax invoice must also be as per the FTA guidelines & UAE VAT regulations.

    Timely payment of consideration for the supply

    For recovering input tax, it’s important that the receiver pays or intends to make the payment of consideration for the supply within the tenure of six months which starts from the agreed date of payment for the supply.

    The recipient must be a taxable person and must register for VAT in order to claim input VAT recovery

    Input tax recovery is important for a proper filing of VAT returns in UAE and to avoid any tax penalty. Certain input VAT is not recoverable as per UAE VAT regulations though it qualifies above conditions. Taxable persons or businesses need to identify correct supplies on which input tax recover is possible. They should also meet the necessary conditions for claiming Input Tax.

    With Shuraa tax consultancy services, know everything about input tax recovery and its necessary conditions. Get the best tax service and help with your input tax-related queries with Shuraa Tax Consultants and Accountants qualified team of tax agents and consultants. Call or text us at +971 508912062 or send an email to info@shuraatax.com.

  • Everything You Need to Know About VAT Returns and Payments

    Everything You Need to Know About VAT Returns and Payments

    VAT returns and payment is the medium to report the total amount of VAT payable or VAT receivable for the tax period to the Federal Tax Authority (FTA). The taxable person needs to submit their VAT return by the end of each tax period. There’s a certain procedure that businesses must follow while filing their VAT return. Let’s know everything about it in detail. 

    What is a VAT return?

    VAT returns & payment comprises the total value of supplies and purchases made by a taxable person during the VAT period and related VAT. This highlights the taxable person’s VAT liability/ VAT refund defined as a difference between total output tax charged to a taxable person on supplies of goods and services and input tax recovered on the purchases made. If the output tax over the input tax, then the difference becomes the amount payable to the Federal Tax Authority (FTA). When this input tax amount exceeds the output tax, the excess amount is the amount refundable to the taxable person. 

    When should I submit my VAT return & make payments?

    Following the end of the tax period, on the 28th day of the month, the FTA should receive the VAT return from the taxable person. In case there’s a weekend or a public holiday on that date, the taxpayer must file the return and pay VAT liability on or before the next working day. Also, if you decide to deregister for VAT, you need to provide your last VAT return for till the last return period, as specified by the FTA.

    To answer your any other VAT related query contact Shuraa, one of the best agencies delivering effective VAT consulting services to its clients. 

    How do I submit a VAT return?

    It’s easy to file a tax return in UAE. Log in to the FTA EmaraTax portal using your authentic username and password. Then, the next step is to go through the navigation menu and start with the filing process. Either the taxable person, or a tax agent, or an authorized legal representative can file the return.

    Shuraa Tax and Accounting Services LLC is a professional Accounting and Tax consulting Company which through its qualified team of Chartered accountants offers the clients with reliable services in VAT, accounting, Tax agencies in UAE.

    VAT returns & payment: Inclusions

    There are important details that are relevant when filing for your VAT returns & payment.

    1. Check and confirm the auto-populated details of the taxable person and tax period
    2. Value of supplies at the standard rate and VAT amount
    3. Value of exempt supplies and zero rates made in the tax period made during the tax period
    4. Value of any supplies subject to reverse charged basis VAT made during the tax period
    5. Expenses incurred with which the taxable person is entitled recovers the amount of input tax. 
    6. Total tax amount that is due and is recovered during the tax period
    7. Value of the payable and repayable tax during the tax period

    Contact Shuraa to know in detail about the procedure of VAT registration, UAE. 

    How do I make a VAT payment? 

    The Federal Tax Authorities (FTA) must receive the payments before the deadline date of the VAT returns i.e. 28th day (or following day – if it is public holiday/weekend) after the end of the tax period. There are various methods for payment like you can use e-services like e-Dirham payment method or a credit card, or a bank-to-bank transfer. If you are making payments via an e-dirham card, you will incur an extra charge of AED 3. However, if you use a credit card then there is a charge of 2-3% of the total payable amount.

    Conclusion

    The experts of Shuraa Tax will help you will all your return filings in a timely and efficient manner. Our range of services cover everything from VAT Registration, Return Filing, tax invoices, and more. Together, we will help to take your business to new zeniths. Call or text us at +971 508912062 or send an email to info@shuraatax.com.

  • What are the VAT guidelines on the Transfer of a business as a going concern in UAE?

    What are the VAT guidelines on the Transfer of a business as a going concern in UAE?

    A person planning to make a business transfer should know the VAT guidelines centered around the TOGC i.e. Transfer of a business as a going concern. According to Article 7(2) of the Federal Decree-Law No. (8) of 2017 on VAT “transferring the whole business or an independent part of the business from a person to a taxable person for the reason of continuing the business (TOGC) is not treated as a supply for VAT purposes. These are a type of business asset transfers, which is not treated as supply, hence no VAT can be imposed. 

    Here are the conditions for any transfer business to be treated as a TOGC which is not subject to UAE VAT

    1. The transfer of a whole or an independent part of the company

    When an owner decides to make a transfer of its business, it should involve a complete takeover of the business or independent part of the business by the purchaser and not just transfer of assets as the latter does not qualify the conditions for TOGC. The transferred business should be in a working condition before and during the time of making the transfer so that the purchaser finds no difficulty in running the business. 

    1. A buyer is a taxable person

    For a transfer of a business to be treated as a TOGC, the buyer must be a taxpayer at the time of transfer. This means he/she should be registered for VAT or has applied for the VAT registration and that application has been approved by FTA. 

    1. The buyer should genuinely be interested in running the business

    The buyer’s intention for running a business should be genuine. They should continue the business exactly the way it was handed over to them without making any fundamental changes in the business. At the moment, there are no restrictions about how long a buyer should run a business however, what matters is the genuine intention of the buyer for running it.

     Federal Tax Authority (FTA) has also clarified the concept of an asset sale, share sale, business sale. Details are as below: –

    Asset sale and share sale

    There’s a difference between share sale and an asset sale. A company is easily sold or bought using the shares sale. Because the company is not directly involved in the transaction, so such share transfers don’t affect the ongoing business operations, and everything stays the same except for the change in the ownership. The new owner takes over the company with all its assets and liabilities which also includes the company’s existing tax obligations.

    While in the assets sale because only assets get transferred there is no change in the ownership of the businesses. The buyer of assets has nothing to do with the existing liabilities of the company.  TOGC is a type of asset sale, which should qualify above mentioned three conditions and not a share sale.

    Assets sale and business sale

    On one hand, there’s a normal asset sale and on the second there’s asset sale involving TOGC. When a taxable person sells the assets of its company, it’s treated as a taxable supply since its supplying a good to the buyer and therefore VAT gets included. However, when the sale of assets happens as a part of TOGC, there is no real supply of goods, hence no VAT is applicable.

    For example, a business owner decides to sell it’s a machinery that will be eligible for VAT. However, if the owner decides to sell ‘all machinery related to one business unit along with factory space’, which can be run independently, it should be treated as a Transfer of a business as a going concern (TOGC), meaning it is not subject to UAE VAT. 

    We, Shuraa Tax and Accounting Services LLC, are among the best VAT Companies in Dubai, promising to give you the best Tax agency, VAT registration, and consultancy services in the UAE. To inquire more, contact our expert team members and know more about the VAT guidelines under TOGC.

  • Top 10 Key Facts About VAT in UAE

    Top 10 Key Facts About VAT in UAE

    The taxation rules in the UAE underwent a modification in 2018. Over 170 nations impose VAT as a means to improve revenue with UAE also doing the same to boost overall revenue. Value Added Tax, also known as VAT, went into effect on January 1st, 2018, in UAE. According to UAE VAT Law, 5% of the price of delivered goods and services are subject to VAT. 

    In certain places, VAT is also called as a consumption tax or a goods and services tax (GST). The final consumer in the UAE is responsible for paying Value Added Tax (VAT) at every stage of the supply chain. Businesses, on the other hand, represent the government by acting as agents to collect and account for taxes.

    Read on the points or simply watch the video to understand the UAE VAT procedures –

    https://www.youtube.com/watch?v=tDTSIZrJXvk

    1.) What is VAT?

    A levy known as Value-Added Tax (or VAT) is imposed on the majority of products and services that are supplied. One of the most widespread consumption taxes in the world is this one. The Goods and Services Tax (or VAT) is present in more than 170 nations, including all 29 EU member states, Canada, New Zealand, Australia, Singapore, and Malaysia. At each point of the supply chain, VAT is calculated. Typically, businesses collect and account for the Tax, but the final consumer is responsible for paying the VAT. Businesses collect the taxes on behalf of the government.

    2.) When should businesses register for VAT in the UAE?

    VAT registration in the United Arab Emirates falls into two categories: mandatory VAT registration and voluntary VAT registration. 

    The two main methods for registering a VAT in the UAE are as follows: 

    Voluntarily registering for VAT: 

    If a business’s annual (or less for new companies) taxable turnover and imports reaches AED 187,500, it may choose to voluntarily register for VAT. 

    Mandatory VAT Registration:

    Businesses with annual (or less for new companies) taxable turnover and imports of more than AED 375,000 or expected taxable revenue is more than AED 375000 must mandatorily register for VAT. 

    Note: Companies in the UAE are not required to register for VAT if their annual taxable turnover and import is less than 187,500 and expected revenue is nil.

    3.) What are the UAE’s VAT exemptions?

    The UAE Executive VAT Regulations list the exempt supplies that are not taxable.

    According to UAE VAT Law, a person is not eligible for an input tax credit on purchases they make if they supply UAE VAT exempt goods and services. 

    Consider a manufacturer who purchases raw materials at a 5% tax rate and creates tax-free goods or exempt goods as an example. In such a situation, he will be responsible for paying the 5% input tax on the raw materials because he will be unable to claim the input tax credit. 

    In addition, the UAE exempts several financial services, residential property supplies, the supply of bare land, etc. from paying VAT.

    4.) Important records to retain

    In addition to accounting records (payments, receipts, purchases, sales, revenues, and expenses), all firms, registered and unregistered, must keep financial records such as balance sheets, profit and loss statements, records of fixed assets, payroll, inventory, and stock levels if any.

    Changes to a company’s basic practices, financial management processes, methods for maintaining accounting records and books, technology used in those practices, and human resources (accountants, tax advisors, etc.) may all be necessary.

    5.) Which products are subject to VAT in the United Arab Emirates?

    Most products and services in the UAE charge VAT @ 5%, which are not exempt or zero rated, or out of VAT scope. Items like office supplies, school uniforms, extracurricular activities, transportation services, automobiles, oil and gas, electronics, cellphones, second-hand goods, import goods, as well as insurance coverage for health, motor, property, reinsurance, water, electricity, etc, are liable to charge VAT.

    6.) What services in the UAE are subject to VAT? 

    In the UAE, certain services are in fact subject to VAT, including plastic, cosmetic, or elective surgery, education offered by private higher education institutions, fee-based financial services, automobile servicing, repairs, catering services, hotels, and restaurants, as well as telecom and electronic services.

    7.) UAE VAT liability payment by the deadline

    In the UAE, the 28th day of the next month serves as both the deadline for filing the VAT return and the deadline for paying the VAT liability.  Deadline will be shifted to the very next day if 28th is public holiday. You can pay VAT liability to FTA in a number of ways, including by bank transfer, or credit card. Processing times and fees vary depending on the mode. Charges for credit card payments are between 2 and 3 percent. The bank fees determine the cost of a bank transfer.

    8.) What is the process in the UAE for filing tax returns?

    A VAT-registered company submits a quarterly VAT Return. As a result, the authority may require specific enterprises to submit a return each month in order to verify compliance with the VAT Laws and lower the likelihood of tax evasion. 

    A registered business must fill out the VAT Return Format according to UAE VAT Executive Regulations. All VAT-registered firms in the UAE submit their returns by logging in to the FTA portal because the return filing process is entirely online.

    9.) How Does the VAT Audit/Tax Audit System Work in the United Arab Emirates?

    A field tax audit is when the FTA conducts a VAT audit or tax audit in the UAE at the company’s or person’s business location. 

    The taxable person typically provides all the data in the FTA Audit File (FAF), a format that has been prescribed. The UAE requires businesses that register for VAT to keep thorough financial records of all transactions in order to submit periodic VAT returns.

    FTA chooses which companies to audit for taxes at its discretion. A VAT audit also seeks to confirm the accuracy of a taxable person’s tax liability. 

    The FTA has the right to request original copies of any records during a tax audit, check the business’s assets and inventories, and even confiscate them if necessary. 

    Additionally, the taxpayer or his tax agent must support and assist the tax authority by offering all required documentation proof. 

    The FTA has the authority to issue a notice to the taxable person asking him to pay the VAT along with penalties if it discovers anomalies after reviewing his financial and tax records.

    10.) What are a Business’s Primary Responsibilities in the UAE?

    Any business primary responsibility includes the following: 

    • Maintain accounting records while making sure that the account information is correct.
    • Register for VAT within the deadline if the minimum or mandatory turnover requirements are met.
    • In case the turnover is below the minimum criteria, keep accurate financial records to demonstrate why it is not required to register for VAT. 
    • If it has a valid TRN, it can charge VAT on both taxable products and services. 
    • Declare an input tax credit for the VAT you paid when buying taxable suppliers. 
    • Timely submission of VAT returns. 
    • If the amount of VAT charged exceeds the amount of VAT paid, you must pay taxes to the government.
    • Comply with UAE VAT laws.

    Conclusion

    As we know, getting our taxes in order is not as easy as it seems. Our tax experts do, however, put our words into action. The characteristics listed above are parts of who we are, and we are proud of each one. Shuraa Tax are the top pick for businesses looking for the best tax consulting firm in the UAE because of this. 

    We provide you with the representation you require to win over investors and stakeholders. In addition to being your tax associate, Shuraa Tax is also your growth partner.

    We would be honored to be a part of your success story if you are looking for the best tax and accounting consulting in the UAE to handle the full procedure. Call us on or WhatsApp at +971508912062 or email us on info@shuraatax.com.

  • What is Voluntary Disclosure under UAE VAT Law?

    What is Voluntary Disclosure under UAE VAT Law?

    What is Voluntary Disclosure?

    If a taxpayer makes an error or omission in a Tax Return, Tax Assessment or Tax Refund application Voluntary Disclosure can be filled. The Federal Tax Authority (FTA) has introduced a VAT voluntary disclosure form 211. It helps the taxable persons to rectify the errors committed while filing their UAE VAT return.

    When can taxable person submit Voluntary Disclosure?

    If taxable person is aware that a Tax Return submitted to the FTA has errors is incorrect then a Voluntary Disclosure Form can be submitted.

    If taxable person become aware that a Tax refund application submitted to the FTA is incorrect, which resulted in calculating the refund amount to which you are entitled according to the Tax Law, being more than it should have been, then Voluntary Disclosure must be submitted to correct such error.

    Is it compulsory to submit Voluntary Disclosure if errors are made while filing Tax Returns?

    Yes, it is compulsory to submit Voluntary Disclosure, however under two conditions Voluntary Disclosure can be avoided.

    1. If the difference in amount of tax paid and should have been paid is not more than AED 10,000 and
    2. If taxable person can correct the error during the period of filing tax returns.

    What are the criteria to submit Voluntary Disclosure?

    1. If due to the error, payable tax is more than tax required to be paid (which could be more than AED 10,000) then voluntary disclosure must be filed. The voluntary disclosure should be filed within 20 business days from the date when the taxable person become aware of the error.
    2. If due to the error, payable tax is less than tax required to be paid (which could be AED 10,000 or less)
    • Correct the error in the return period in which error is discovered. Time limit will be within the due date for filing the respective tax return.
    • If there is no means through which errors can be rectified and the unpaid tax liability if less than AED10,000 then voluntary disclosure should be filed within 20 business days from the date when the taxable person realised about the error.

    What are the supporting documents required to submit Voluntary Disclosure?

    Along with voluntary declaration a letter needs to be filed which should be explanatory of facts and details of errors. It is also important to mention the reasons because of which Voluntary Disclosures has been submitted. Supporting documents should be uploaded in this section along with mentioned letter.         

    Are there any penalties for submitting Voluntary Disclosure?

    There are 2 types of penalties for submitting Voluntary Disclosure.

    1. A fixed penalty of AED 3,000 is applied for submitting Voluntary Disclosure for the first time.
    2. Repeated submission of voluntary disclosure could cost a penalty of AED 5,000 or more.

    Nevertheless, the FTA also penalises based on percentages as showcased below –

    • If Voluntary Disclosure is filed before the authority notifies to taxable person and before any tax audit, then a 5% of the tax amount which was not disclosed earlier is charged as penalty.
    • If Voluntary Disclosure is filed after the authority notifies for a tax audit but before starting the tax audit, then 30% of the unpaid tax amount is charged as a penalty.
    • If Voluntary Disclosure is filed after start of tax audit, then 50% of the unpaid tax amount is charged as penalty.

    For any VAT related query please speak to our VAT and Tax Return experts. Call us on +971508912062.

  • What records must businesses maintain for tax filing?

    What records must businesses maintain for tax filing?

    In accordance with the UAE Federal Tax Authority, companies in the UAE have to record their financial transactions for UAE tax filing every interval. Tax filing also referred to as VAT return filing has to be done by a taxable person at regular intervals depending upon the company’s tax period.

    Business and commercial entities are to ensure that their financial records are accurate and up to date. The companies need to ascertain that in order to file tax in Dubai or anywhere across the UAE they also have to maintain all the monthly, quarterly and a yearly financial transaction made under the company.

    The Federal Tax Law stated that commercial entities require to maintain company accounts, records, and commercial books. Also, the company needs to keep all the documents related to taxation, such as older tax returns, documents related to the FTA, etc.

    Although the documentation or records may vary from company to company – Shuraa Tax Consultants and Accountants have listed the most relevant documents that any business must record for UAE tax filing and to make it available to FTA if requested in future.

    • Companies must maintain records of all supplies and imports of goods and services for tax filing.
    • For tax filing, they must record tax invoices, tax credit notes, alternate documents for goods and services received.
    • For tax filing, they must have a record of tax invoices, tax credit notes and alternate documents issued.
    • Businesses should also keep a record of goods and services that have been disposed of or used for matters not related to the business.
    • A detailed record of VAT paid on the unused or disposed goods and services must also be documented.
    • Records of goods and services purchased for which the input tax was not deducted.
    • Records of exported goods and services in order to file tax returns.
    • Records of adjustments or corrections made to accounts or tax invoices.
    • Records related to Capital Assets like a register of capital assets, Input tax on a capital asset, related adjustments for at least ten years.
    • Output tax due on taxable supplies and output tax due on taxable supplies accounted for via the reverse charge mechanism.
    • Any records related to a real estate required to be kept shall be held for a period of 15 years after the end of the Tax Period to which they relate.

    In addition, companies should keep a VAT record or account which shows:

    • Output due on taxable supplies
    • Output tax due on based on reverse charge mechanism
    • Output tax due after the correction of any errors or adjustments;
    • Input tax recoverable on supplies or imports;
    • Input tax recoverable after the correction of any errors or adjustments.

    Failure to keep the required records and other information as per the Tax Procedures Law and the Tax Law will attract a penalty of AED 10000 for first-time failure or AED 50000 in case of repetition. There are other penalties related to failures in record keeping and submitting details requested by authorities.

    Tax filing in the UAE is best done by a taxable person or tax and accounting consultants offering accounting services in Dubai or anywhere across the UAE.

    We are Shuraa Tax Consultants and Accountants do not only do tax filing but also offer you tax return preparation services. Our tax and accounting consultants make sure that you have every document recorded for tax filing. At Shuraa Tax we offer you certified tax preparer that is well aware of the various tax laws applied by the FTA for tax filing in the UAE.

    So, if you are doubtful on how to file your own taxes or are searching for the right tax filing consultants – simply speak to our taxation experts or tax and accounting consultants.

    Call us on +971508912062 or email us info@shuraatax.com. 

  • What are the Types of Taxes in the UAE?

    What are the Types of Taxes in the UAE?

    The UAE is known around the world as one of the most tax-friendly countries. One of the biggest attractions for expats, investors, and entrepreneurs is that there’s no personal income tax or capital gains tax here. In fact, Dubai and Abu Dhabi have even been ranked among the most tax-friendly cities globally, which makes the UAE a hotspot for people who want to live, work, and grow their businesses in a low-tax environment.

    That being said, the UAE isn’t completely tax-free. Over the past few years, the government has introduced several types of taxes to support economic growth and reduce reliance on oil revenues. These include the 5% Value Added Tax (VAT) introduced in 2018, the 9% Corporate Tax that started in 2023, as well as Excise Tax on certain goods, Customs Duties on imports, and municipality and tourism-related fees.

    So, let us break down the main types of taxes in the UAE in simple terms, so that both residents and businesses can better understand how the system works and what it means for them.

    Does Dubai Have Taxes?

    Dubai is often seen as a tax-free city, but the reality is a bit more nuanced. While there is no personal income tax, no capital gains tax, and no inheritance tax, Dubai does have certain other taxes and fees that residents, businesses, and visitors should know about.

    Some of the key taxes include:

    • Value Added Tax (VAT)
    • Corporate Tax
    • Excise Tax
    • Customs Duties
    • Municipal and Tourism Taxes

    So, while Dubai doesn’t tax personal income, it does have a structured system of indirect and business-related taxes.

    Types of Taxes in the UAE

    Here are the different types of taxes in Dubai and other Emirates for businesses and individuals:

    1. Value Added Tax (VAT)

    Value Added Tax (VAT) is a consumption tax that is levied on the supply of most goods and services at each stage of the supply chain. While businesses collect and account for the tax on behalf of the government, the tax is ultimately borne by the end consumer.

    Current VAT Rate:

    The standard VAT rate in the UAE is 5%, which applies to most goods and services. This is actually quite low compared to many other countries around the world.

    Types of VAT in the UAE:

    The UAE has three main VAT categories:

    • Standard Rate (5%): This applies to most things you buy – groceries, clothes, electronics, restaurant meals, hotel stays, and most services.
    • Zero Rate (0%): Exports outside the GCC, international flights, some education services (schools, universities), healthcare services (approved treatments, medicines), and investment-grade precious metals. Businesses still need to report these in VAT returns but at 0%.
    • Exempt: Some goods and services are completely exempt from VAT, meaning no tax is charged and businesses can’t claim input tax credits on these items.

    Who needs to register for VAT in UAE?

    Businesses must register for VAT if their annual turnover exceeds AED 375,000. There’s also a voluntary registration option for businesses with turnover between AED 187,500 and AED 375,000. If you’re a non-resident business making supplies in the UAE where VAT should be charged, you need to register regardless of your turnover amount.

    VAT Refunds for Tourists:

    Visitors can claim a VAT refund on purchases over AED 250 (including VAT) when shopping at participating stores, similar to tax-free shopping in other countries.

    How VAT works (example):

    If a restaurant sells a meal for AED 100, it must add 5% VAT (AED 5). The customer pays AED 105, and the restaurant passes AED 5 to the Federal Tax Authority (FTA). The restaurant can also claim back VAT it paid on supplies (like ingredients).

    2. Corporate Tax (CT)

    Corporate Tax (CT) is a direct tax levied on the net profit or taxable income of corporations and other businesses from their activities. It is a significant shift in the UAE’s long-standing, low-tax environment.

    Current Corporate Tax Rates:

    The UAE has a three-tier corporate tax system:

    • 0% on profits up to AED 375,000.
    • 9% on profits above AED 375,000 (one of the lowest corporate tax rates globally).
    • 15% on certain large multinational companies with global revenues over EUR 750 million, following OECD’s global minimum tax rules.

    Who pays Corporate Tax in the UAE?

    • All mainland companies.
    • Free Zone companies are also within scope, but qualifying free zone income (such as trade with outside UAE or other free zones) can still enjoy 0% tax, provided they meet the UAE’s substance rules.
    • Foreign companies with a permanent establishment in the UAE.

    Exemptions:

    • Government entities and government-controlled companies.
    • Extractive industries (like oil & gas) are taxed separately by the emirates.
    • Certain non-profits, charities, and public benefit organisations (if approved by the Cabinet).

    What Counts as Taxable Income?

    Corporate tax is calculated on net taxable profits, which means:

    • Your total business income
    • Minus allowable business expenses
    • Minus any applicable deductions or exemptions

    Deductions & Reliefs:

    • Businesses can deduct expenses like salaries, rent, utility bills, and R&D costs before calculating taxable income.
    • Losses can be carried forward and offset against future taxable profits.
    • Small Business Relief: Companies with revenues below AED 3 million (until 2026) can elect for relief and be treated as if they made no taxable income.

    3. Excise Tax

    Excise tax is an indirect tax levied on specific goods that are deemed to be harmful to human health or the environment. It is a form of “sin tax” and was introduced to discourage the consumption of these products and to generate additional revenue for the government. Unlike VAT, which is applied at each stage of the supply chain, excise tax is a one-time tax collected at the point of import or production.

    Products & Rates:

    • 100% on tobacco and tobacco products.
    • 100% on energy drinks.
    • 50% on carbonated drinks (except plain sparkling water).
    • 50% on sweetened drinks (introduced in December 2019).
    • 100% on electronic smoking devices and related liquids.

    Who pays the Excise Tax in the UAE?

    Excise tax is paid by importers, producers, and stockpilers of excisable goods. Ultimately, the cost is passed on to the consumer through higher retail prices.

    4. Custom Duties

    Customs duties are taxes levied on goods imported into the UAE. They are collected by UAE Customs at the border and then distributed among the emirates or GCC states (since the UAE is part of the GCC Customs Union).

    Standard Rate:

    Generally, 5% of the cost, insurance, and freight (CIF) value of most goods.

    Exceptions & Special Rates:

    • 50% duty on alcohol.
    • 100% duty on tobacco products.
    • Some goods may be subject to higher/lower rates depending on trade agreements.

    Free Zones Advantage:

    Goods imported into the UAE Free Zones are exempt from customs duties as long as they stay within the zone. If they are later imported into the mainland, then customs duty applies.

    Exemptions:

    • Goods imported within the GCC states (if meeting the rules of origin).
    • Diplomatic and military imports.
    • Personal belongings and household items of UAE nationals returning to the country.
    • Imports for charities and certain public organisations.

    While the overall customs policy is governed by federal law, customs administration and collection are managed by the individual Emirate’s customs departments, such as Dubai Customs, Abu Dhabi Customs, etc., under the general oversight of the Federal Authority for Identity, Citizenship, Customs, and Ports Security (ICP).

    5. Municipal Taxes

    Municipal taxes are local-level taxes imposed by emirates on residents, property users, and hospitality services. These are not federal taxes but are collected by municipal authorities in each emirate.

    1. Dubai:

    Housing Fees: A municipal tax levied on residential tenants. It is calculated as 5% of the annual rental value, as specified in the tenancy contract. The fee is typically paid monthly and is included as a separate line item on the tenant’s Dubai Electricity and Water Authority (DEWA) bill.

    Market Fees: A similar tax, also at a rate of 5%, that applies to commercial properties.

    2. Abu Dhabi:

    Rental Fees: A fee of 5% of the annual rental value is levied on tenancy contracts. This fee is added to the monthly Abu Dhabi Distribution Company (ADDC) utility bill. It’s crucial to note that these fees apply to expatriate residents, while UAE citizens are typically exempt from this charge on residential contracts.

    6. Personal Income Tax

    Income tax is a tax on salaries, wages, and personal earnings. In most countries, individuals pay income tax directly from their monthly salary or annual income.

    However, the UAE is famous for having no personal income tax. Residents and expatriates do not pay tax on salaries, wages, or investment income (like dividends, rental income, or capital gains). There is also no inheritance tax or wealth tax in the UAE.

    7. Other Fees & Indirect Taxes

    In addition to VAT, Corporate Tax, Excise, and Customs Duties, the UAE also has smaller but important indirect taxes and fees that residents, visitors, and businesses should know about:

    Road Tolls:

    • Dubai (Salik): Introduced in 2007, each time a car passes through a Salik gate, AED 4 is deducted automatically via a prepaid Salik tag. There’s no daily maximum cap.
    • Abu Dhabi (Darb): Introduced in 2021, AED 4 per crossing during peak hours at selected toll gates. Maximum daily cap is around AED 16 per vehicle.

    Stamp Duties and Administrative Fees:

    • These are one-time fees paid to government departments for specific transactions, particularly in the real estate sector.
    • Property Transfer Fees: When a property is bought or sold, a mandatory fee is paid to the relevant Land Department. In Dubai, this fee is 4% of the property’s sale price or market value, typically split between the buyer and the seller. In Abu Dhabi, the fee is 2% of the property’s value. Other emirates have similar charges.
    • Mortgage Registration Fees: In Dubai, a fee of 0.25% of the loan amount is charged for registering a mortgage.

    Note: Keep in mind, tax rates are subject to change. Contact experts at Shuraa Tax for up-to-date information.

    Stay Compliant, Stay Stress-Free with Shuraa Tax

    The UAE continues to stand out as one of the world’s most tax-friendly countries. With no personal income tax and low rates on business profits, it’s a great place to live, work, and build a business. But at the same time, there are now a few taxes like VAT, Corporate Tax, Excise Tax, and municipal fees that both individuals and companies need to understand.

    For business owners, keeping up with tax rules and filing everything correctly can feel tricky. That’s where Shuraa Tax can help. From corporate tax and VAT registration to excise tax, accounting & bookkeeping, payroll, and tax residency certificates, our experts handle it all so you can focus on running your business with peace of mind.

    If you want expert help and a smooth, hassle-free way to handle your taxes in the UAE, just reach out to Shuraa Tax today.

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