The value added tax (VAT) on goods is a new concept here in the UAE. Although the introduction of VAT has caused a shift in the accounting process, the UAE has tried to ensure a smooth transition into the new system and is still working to perfect it.
The UAE is doing their part by hosting several VAT education workshops so businesses both small and international will be able to understand how to comply with financial laws and effectively manage VAT. VAT is complex, but we can look at and anticipate the challenges hence be able to reduce disruption and cost to the business with a practical and comprehensive approach. At Kelmer, we have restructured the teams as well as our software to accommodate the changes that VAT has brought. Our services also included registration/deregistration for VAT, quarterly VAT returns submissions, VAT reconsideration, VAT amendments, VAT clarification and voluntary disclosure processes among other accounting services.
Even though Kelmer Group offer an all-round VAT service to our clients here in the UAE, we urge our clients and business owners in general to familiarize themselves with the rules and regulations when it comes to VAT laws by the Federal Tax Authority. The key to operating efficiently and gaining full advantage of the new VAT laws is first to properly understand the law and stick to the rules. This will enable them to function efficiently and guarantees growth of a business in these circumstances.
According to the Unified VAT Agreement signed earlier, all GCC member countries are in the process of implementing VAT. As of now the UAE, Saudi Arabia and Bahrain have initiated the tax system, Oman is launching it in September this year and Kuwait and Qatar will follow. Hence, it is most relevant that all businesses understand the system in order for their businesses to flourish in the GCC region. The UAE is using what they have learned during the first year on implementing VAT and introducing amendments that will help the system work more efficiently. It is vital to establish a VAT management system, which maintains the business and boosts its reputation while complying with the law.
Kelmer Group have identified some key factors that would help with adhering to the new tax laws.
- Make sure you are VAT registered. Some businesses are small and do not qualify for VAT returns however registering for it and organizing processes as you are already in the process of filing for returns will help you prepare from the start and allow you to familiarize yourself with the VAT laws.
- If you are already an established business, adopt a VAT compliant accounting process and be open to changes. An automated system will reduce the number of errors that occur compared to when an accounting professional is managing the books. This will also allow businesses to effectively and smoothly charge VAT to consumers and reclaim this according to the provisions of the law.
- VAT returns/reclaims, know and understand all the details of returns as well as reclaims which are two different procedures. This is so you can optimize your returns and achieve the most returns. According to the law, there are a number of expenses or activities that businesses can reclaim VAT on – this will help an organization’s overall bottom line and reduce their tax burden.
- Tax filing due dates.Make sure you are aware of the due dates and file your returns on time because not doing so would lead to huge fines and late fees.
- Having an efficient records systemto keep a track of ‘VAT on Sales’ and ‘VAT on Purchases’. This needs to be documented in an easy way so the business can compute the amount due to the government correctly. Make sure all these records are kept up to date as it is mandatory by UAE VAT law and helps maintain correct transactions within the company. Companies can also easily pull out the files in case of government enquiries.
You can get more information on VAT in the UAE here, https://government.ae/en/information-and-services/finance-and-investment/taxation/valueaddedtaxvat