The VAT is generally known as Value Added Tax that is added to each stage of the supply chain starting from production to sale. When you are paying VAT for a product, the particular cost of the product is already taxed before your payment.
Here we will discuss all the necessary details about the VAT. We will also provide you information about the working procedure of VAT in the United Arab Emirates.
VAT Implementation in UAE
The United Arab Emirates federal and Emirates government provides their countrymen with various types of public services. They are like hospitals, roads, schools, wastage controls, parks and including police services. These are some of the services to which is paid by us with the help of the UAE government budgets.
The Value Added Tax helps our country with a new way of earning money that will be helpful for us to improvise the high-quality public services for the future. It will also help the government to extend its vision on the income that is derived from crude oil and hydrocarbons. The VAT was first introduced in the UAE on 1st January 2018.
Implementing VAT along with the other GCC countries
The United Arab Emirates is directly connected with the Economic arguments that take place between the GCC states and the GCC customs union. The group of countries that falls under GCC has proudly worked together for creating and implementing new public policies. These policies are best for the people as of the country.
Value Added Tax for Business
When VAt is added to the business, then you need to follow a few certain steps for running your business smoothly and effectively.
Registration to VAT
All the business concerns must register for VAT if their business transactions like supplies, imports, and exports exceed more than the mandatory registration threshold of AED 375,000. In addition to that, you can also choose to register your business for VAT that is below the mandatory registration threshold but over the voluntary registration threshold of AED 187,500.
Just like that, a business concern can also register voluntarily when its expenses are much higher than that of the voluntary registration threshold. It can also get a much better opportunity to register to VAT voluntarily which will be helpful for enabling and developing a primary start-up business that has no turn-over to register to VAT.
VAT-related Responsibilities towards Business
All the business concerns of the United Arab Emirates must record all types of financial transactions. This process of keeping records will help you to keep your records in an accurate manner and up-to-date.
You also must know about some kind of business that has the ability to meet their minimum annual turnover as required for registering for VAT. There are some businesses that might think that they don’t have to register to VAT should maintain their own business records at any event.
Purpose of the VAT Registered Business
All the businesses those who are registered for VAT should follow these points which are given below:
- They must charge VAT on the taxable goods or services for what they supply to the common people;
- The concerns also might demand any VAT that they have already paid on some particular goods or services related to the business;
- They also must keep business records which will help them to show the UAE government. These records will play a vital key role in proving the government that they are running the business in the right way.
When you are running a business that is registered to VAT, then you must keep records of the particular amount of VAT that you have charged from the customer. Moreover, you also have to keep records of the amount of VAT that you have paid to the government.