Shuraa Tax Blog

Tag: federal tax authority

  • Will companies in the UAE have to reissue tax invoices?

    Will companies in the UAE have to reissue tax invoices?

    The Federal Tax Authority (FTA) recently clarified the exchange rates to be used for tax invoices which are raised in AED as well as in other foreign currencies. This was announced through VAT Public Clarification VATP004.

    According to the FTA, companies issuing tax invoices in foreign currencies will make use of the exchange rates applicable as per the date of supply. The circular also stated that only the exchange rates mentioned and documented by the UAE Central Bank are to be used in the tax invoices.

    The clarification was circulated to UAE companies in May 2018. Several companies were uncertain if they had to reissue the old invoices (i.e. an invoice dated from January 2018 until the date of clarification 17 May 2018). However, to everyone’s relief, the FTA also quoted that, “There is no requirement for businesses to reissue historical tax invoices from periods prior to 17 May 2018 to show the Central Bank exchange rate, provided the exchange rate used is from a reliable source and the same source has been used consistently.”

    Nevertheless, the FTA also noted that in case a tax invoice was issued after the 17 May 2018 and the date of supply was before 17 May 2018, companies need to make use of the older exchange rates published under the UAE Central Bank which were published in January 2018.  According to the circular, business entities need to make use of exchange rates provided by the Central Bank of the UAE. The circular also said that in terms of failure to account for the due tax on imports as per the FTA tax compliances there could be penalties.

    If you as a company are still not sure how to get your tax invoices tax compliant, book a VAT consultation with Shuraa Tax Consultants in Dubai. For more information call a Shuraa tax consultant in Dubai. Simply call on +971508912062. You may also drop in an email on info@shuraa.com or read more about Shuraa Tax Consultants on www.shuraatax.com.

  • FTA creates three categories to classify eligible good

    FTA creates three categories to classify eligible good

    In a press release published by the Federal Tax Authority (FTA) recently, they determined the three main categories of ‘eligible goods’. The eligible goods were classified for calculating the VAT – Value Added Tax in the UAE. VAT on the eligible goods will be calculated based on the profit margin scheme.

    The classification of edible goods are stated below –

    • Second-Hand Goods – Such as tangible moveable property, suitable for future use or upon repair.
    • Antiques – Goods that are older than 50 years.
    • Collectors’ Items – Such as stamps, coins, currency, scientific pieces, historical or archaeological artifacts, etc.

    FTA in the press release also noted that only the goods which had been subject to VAT before the supply may be subject to the profit margin scheme. The FTA also defined the profit margin scheme, they said that it will be considered as the difference between the buying and selling price of the item which includes taxes.

    The initial announcement about the eligible goods under the profit margin scheme was made in a “Public Clarification” as per the Federal Decree-Law No. (8) on Value Added Tax.

    Reportedly, the FTA informed the registered businesses to carefully verify eligible goods for the profit margin scheme. As a result, stock on hand of used goods that were attained prior to the effective date of Federal Decree-Law No. (8) on the VAT, or goods that have not previously been subject to VAT for other reasons, are not eligible to be sold under the profit margin scheme. VAT is, therefore, due to the full selling price of these goods, the release stated.

    The press release further explained that registered businesses may apply the scheme to eligible goods in situations such as:

    • If the goods were purchased from either a person who is not registered for VAT or a Taxable Person who calculated VAT on the supply by reference to the profit margin,
    • If the taxable person made a supply of goods where input tax was not recovered in accordance with Article 53 of Cabinet Decision No. (52) of 2017.

    The press release also said that a taxable person will not be allowed to apply the profit margin scheme in cases where they had issued a tax invoice or any other document mentioning an amount of VAT chargeable. They further mentioned that Taxable Persons must keep inventory and similar documents that clarify the situation of every item bought or sold. Also, purchase invoices with complete details of items bought under the profit margin scheme must be specified.

    If you are still not clear on the profit margin scheme or would want to know how to impose VAT in UAE simply contact Shuraa Tax Consultants for more details. You may call us on +971508912062.

    You may also drop in an email will your queries on info@shuraatax.com or chat for free will a live tax consultant on www.shuraatax.com.