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    Middle East VAT registration and declaration


    What is VAT?

     

    VAT is the Value Added Tax/ AD VALOREM tax, that is levied according to the price of the goods  when shopping.If the price is inc vat, that is, tax is included, excl vat is untaxed, and Zero vat is taxed at 0. VAT tax points vary from country to country, such as 20% and 19% in the UK and Germany respectively.

     

    VAT is often referred to as VAT in china. The VAT rate in mainland China is generally 17%, and some have a low tax rate of 13% and a zero tax rate.

     

    From January 1, 2018, the UAE and Saudi Arabia will levy a VAT

     

    According to the Gulf Cooperation Council (GCC) implementation of the Value Added Tax (VAT) framework agreement, the United Arab Emirates and Saudi Arabia have levied VAT on January 1, 2018.

     

    In addition to health care, food, insurance, education, local transportation, and some financial services, all other products and services (both government and private) are subject to VAT; commercial properties are subject to VAT, residential properties are exempt; Goods subject to countries or regions outside the Gulf Cooperation Council will be exempt from VAT.

     

    UAE Ministry of Finance's Q&A on the VAT Rules

     

    1.Q: Why does the UAE implement a VAT policy?

    A: The UAE federal and emirate governments provide citizens with a variety of public services, including the construction of hospitals, roads, public schools, parks, regulated waste and police power. These public services come from financial allocations, and VAT will be used to increase fiscal revenue. Implementing VAT policies will help improve the quality of public services and reduce the UAE government's reliance on oil revenues.

     

    2.Q: Why does the UAE coordinate with other GCC countries to implement VAT policies?

    A: The UAE has joined the Gulf Cooperation Council Economic Agreement and the Customs Union of the Gulf Cooperation Council Member States. The GCC countries have always formulated and implemented national public policies.

     

    3.Q: When does the VAT take effect and what is the tax rate?

    A: The VAT was issued on January 1, 2018, and the tax rate is 5%.


    4.Q: How will the government charge VAT? 

    A: The government will refine the company's income, cost, value-added tax and other data. The value-added tax paid by the enterprises and traders to the suppliers will be borne by the customers of the enterprises and traders, and the tax difference will be paid to the UAE government.

     

    5.Q : Does VAT cover all products and services?

    A: As a general consumption tax, VAT will apply to most goods and services.

     

    6.Q: Will the cost of living increase after the implementation of the VAT policy?

     A: After implementing the VAT policy, the cost of living will increase slightly, but the cost of living depends on the individual's life and consumption patterns. For example, citizens' expenditures are mainly used to purchase ordinary household items, and the cost of living will not increase significantly.

      

    7.Q: What measures will the government take to ensure that merchants do not use VAT as an excuse to increase product prices?

    A: The main purpose of implementing VAT is to improve the economic foundation of the UAE. After the implementation of the VAT policy, the VAT paid by the citizens will be clearly indicated on each transaction. The VAT is not subject to the manipulation of the merchants. Citizens can decide Whether to buy this product according to the VAT amount.

     

    8.Q: Do all companies need to register for VAT in the government?

     A: Not all companies need to register for VAT, only companies that meet the minimum turnover criteria need to be registered. Through this move, the protection of small and medium-sized enterprises will be protected, and the minimum turnover standards will be announced after the official implementation of the VAT policy.

     

     9.Q: What are the corresponding duties of the VAT that the company should bear?

     A: All companies in the UAE need to be truthful about the financial situation. Enterprises that meet the minimum turnover standards are classified as VAT-registered Businesses. VAT-registered enterprises usually need to perform the following duties:

    - Charge VAT to customers

    - Tell the customer that the VAT has been paid

    - Accept government departments to verify financial situation

    - Fill in the amount of VAT collected and the amount of VAT paid

    - If the value of VAT collected is higher than the amount of VAT already paid, the higher department must be handed over to the government

     

    10.Q: What preparations do you need to make before you pay VAT?

     A: Before the formal implementation of VAT, enterprises will be allowed to set aside 18 months for consultation and familiarization with relevant policies. During this period, enterprises need to strictly control the financial management system and adjust the human resources structure (such as hiring accountants and tax consultants) to complete. These procedures can then begin to fulfill the obligation to pay VAT.

     

     11.Q: Will the government take the cost of adjusting the tax payment system?

     A: The government will bear the expenses for popularizing VAT, but it will not bear the cost of replacing the tax payment back-office system and hiring accountants and tax experts.

     

     12.Q: Do I need to pay VAT for visitors to Afghanistan?

     A: Yes. Visitors to Afghanistan are subject to VAT, which is the main source of UAE fiscal revenue. However, the relevant agencies have reduced the value-added tax paid by tourists to the lowest to ease the pressure on tourists.

     

    13.Q: Do business visitors need to pay VAT?

     A: Yes. Business visitors are also subject to VAT when they are in the UAE. This policy is implemented in other countries around the world and has a higher tax rate than the UAE.

     

     14.Q: What tax policies will be implemented in the UAE in the future?

     A: According to the practical experience of other countries in the world, the UAE is also considering the implementation of other taxes. But what is certain is that the UAE has not included personal income tax recently.

      

    15.Q: Will the implementation of VAT affect the economic growth of the UAE?

     A: The analysis shows that the implementation of VAT helps the UAE to diversify its fiscal revenues, reduce the country's dependence on oil revenues, and thereby achieve the goal of strengthening the public service system, thereby turning the UAE into a mature economy.

     

     16.Q: How do I understand the details of VAT?

     A: The UAE government will build a VAT website and knowledge lectures to help citizens and enterprises to popularize the knowledge of VAT. Officially implement a VAT line, and citizens can call for advice.

     

     17.Q: Is there an individual or organization with VAT immunity?

     A: VAT is a widely used tax and is not targeted at any individual or organization. However, it does not rule out the UAE's refund of taxes paid by certain government agencies to fulfill its international obligations.

      

    18.Q: What penalties will the company face for refusing/missing VAT?

    A: At present, the UAE government is currently studying and improving the penalties for refusal/missing VAT.


    (For specific charging standards and precautions, please consult  kelly TEL(Wechat:15986699557;QQ:373379994)

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