Mahar Afzal’s Post

Khaleej Times has launched a new initiative to offer readers expert insights about the impact of VAT and Corporate Tax on UAE’s businesses. Being an expert, associated with “Khaleej Times”, please find my comments where businesses are engaged in buying and selling second-hand goods in the UAE. I have addressed, is it possible for the businesses to pay VAT on the net margin to the FTA to remain competitive in the market, or they are required to apply VAT on the gross sales price? If they are permitted to apply VAT on the net margin for second-hand goods, then: •⁠ ⁠On which goods they can apply the profit margin scheme? •⁠ ⁠What are the preliminary conditions to apply the profit margin? •⁠ ⁠How can they comply with and report the numbers in their VAT return? https://lnkd.in/dahgEP5x #VAT #profitmarginscheme #uae #fta

VAT in the UAE The United Arab Emirates introduced VAT in January 2018 at a standard rate of 5%. The implementation of VAT was part of the country’s strategy to diversify revenue sources, reducing reliance on oil revenues. VAT applies to most goods and services, with some exceptions, such as healthcare, education, and basic commodities, which are either zero-rated or exempt. For businesses in the UAE, registering for VAT is mandatory if their taxable supplies and imports exceed AED 375,000 annually. Companies below this threshold can choose to register voluntarily. Compliance involves charging VAT on sales, filing periodic returns, and paying the government any VAT collected, minus the VAT paid on purchases. Non-compliance can result in penalties and legal action. #VAT #TaxCompliance #Taxation #Finance #Accounting #BusinessTax #VATCompliance #TaxPlanning #UAEVAT #ValueAddedTax #TaxTips #TaxStrategy #FinancialManagement #BusinessGrowth #TaxUpdates #TaxRegulations #VATRegistration #TaxAdvice #VATReturns #CorporateTax #TaxKnowledge #UAEBusiness #TaxProfessionals #FinanceTips #SmallBusinessTax

In the UAE, zero-rated VAT refers to goods and services that are taxable, but the VAT rate is 0%. This means that while these transactions are considered taxable supplies, the rate of VAT applied to them is 0%. Businesses can still reclaim any VAT they have incurred on costs related to these zero-rated supplies. Examples of zero-rated supplies in the UAE include: 1. Exports of goods and services to outside the GCC region. 2. Certain international transportation services and related supplies. 3. Certain aircraft and ships. 4. Precious metals such as gold and silver that meet certain criteria. 5. Newly constructed residential properties, which are supplied for the first time. 6. Specific educational and healthcare services and related goods and services. Zero-rating is beneficial for businesses involved in these activities because they do not charge VAT on their supplies, but can still reclaim the input tax they have paid.

🚨 UAE VAT Exemptions You Should Know! 🚨 Understanding VAT laws is crucial for businesses operating in the UAE. As per the UAE Federal Decree-Law No. (8) of 2017, several key sectors are VAT exempt: 🏗️ Bare Land: The supply of undeveloped plots is not subject to VAT. 💰 Financial Services: Financial services not conducted for an explicit fee, discount, commission, or rebate are VAT exempt. 🚍 Local Passenger Transport: Buses, taxis, and metro services transporting passengers within the UAE are VAT-free. 🏠 Residential Properties: The sale and lease of residential buildings (other than zero-rated properties) are exempt from VAT. These exemptions help keep essential services more affordable for everyone! Stay informed and compliant. ✅ #UAEVAT #TaxExemption #VATLaw #Finance #BareLand #FinancialServices #LocalTransport #RealEstate #TaxCompliance #BusinessInUAE #VAT

VAT in the UAE The UAE introduced a 5% Value Added Tax (VAT) in 2018 to diversify its economy. Here’s a quick overview: • Thresholds: Mandatory registration for businesses with annual taxable supplies over AED 375,000. Voluntary for those above AED 187,500. • Filing: VAT returns are filed quarterly, with timely submission crucial to avoid penalties. • Input Tax: Businesses can recover VAT paid on expenses related to taxable supplies. • Zero-Rated Goods and Services: Exports, healthcare, education, and certain food items are taxed at 0%, allowing businesses to claim input VAT without charging VAT on these supplies. • Exemptions: Some financial services and residential properties are VAT-exempt, meaning no VAT is charged or recoverable. Compliance ensures smooth operations and contributes to the UAE’s economic growth. #VAT #UAE #TaxCompliance #ZeroRated #BusinessTips

VAT in UAE

Understanding VAT in the UAE vs. KSA: UAE VAT: 5% rate, implemented in 2018, with various exemptions and zero-rated sectors like healthcare and education. Managed by the Federal Tax Authority (FTA). KSA VAT: Initially 5%, increased to 15% in 2020. Overseen by the Zakat, Tax, and Customs Authority (ZATCA), with stricter compliance and fewer exemptions for free zones. Both systems aim to streamline tax collection, but key differences affect businesses operating across the GCC. The major differences will be outlined and provided soon. #VAT #TaxCompliance #BusinessInsights #UAE #KSA #GCC

When a Business is Required to Register for VAT in Dubai🏢💼 Mandatory Registration 🚨 A business must register for VAT in Dubai if the: Total taxable supplies & imports exceed the threshold limit of AED 375,000💹 Voluntary Registration 📝 A business may opt to register for VAT voluntarily if: Total taxable supplies & imports exceed the threshold limit of AED 187,500💹

UAE VAT Series 🇦🇪 | Post #4 Voluntary Registration for VAT ⏩Reasons to Voluntarily Register for VAT: 1. Recover VAT on Expenses: Enables the business to reclaim VAT paid on purchases and operating costs. 2. Avoid Embedded VAT in Pricing: Prevents VAT from being included in the product prices, which can avoid price increases due to non-recoverable VAT. 3. Cash Flow Advantages: Utilizes the reverse charge mechanism when purchasing goods from outside the UAE, improving cash flow. ⏩Criteria for Voluntary Registration: o Total value of taxable supplies and imports exceeds AED 187,500 in the past 12 months (Historic Test). o Anticipation that total value of taxable supplies or imports will exceed AED 187,500 in the next 30 days (Future Test). o Business incurs expenses exceeding the Voluntary Registration Threshold (AED 187,500). ⏩Effective Date of Voluntary Registration: 1. Standard Effective Date: o From the first day of the month following the month in which the application is made. 2. Requested Effective Date: o From an earlier date as requested by the business and agreed upon by the Federal Tax Authority (FTA). 🌟Example 6: ABC Trading is preparing to launch a new electronics store. Although they haven't started trading yet, they are currently renovating their store and purchasing initial inventory. They began incurring costs on 1 March and plan to open for business on 1 May. They expect to incur VAT-bearing costs of AED 250,000 before starting operations on 1 May. Due to this, they can apply for voluntary VAT registration. As ABC Trading's expected taxable expenditure in the next 30 days exceeds the Voluntary Registration Threshold, they are eligible to apply for VAT registration. Stay Connected for more Updates 😀 #uaevat #uaetax #voluntaryregistration #fta

🌟 Profit Margin Scheme in UAE VAT 🌟 The Profit Margin Scheme offers a significant advantage for businesses dealing with specific goods. Under this scheme, VAT is calculated on the profit margin rather than the total sale value, which can lead to substantial savings. 🔍 What is the Profit Margin Scheme? The Profit Margin Scheme allows taxable persons to pay VAT on the profit margin earned on the supply of eligible goods, instead of the full sale value. This is particularly beneficial for businesses dealing in second-hand goods, antiques, and collectors’ items. 📌 Eligible Goods: > Second-hand goods (tangible moveable property suitable for further use) > Antiques (goods over 50 years old) > Collectors’ items (stamps, coins, currency) 💡 Why Use the Profit Margin Scheme? This scheme prevents double taxation on goods that have already been subject to VAT. It ensures that VAT is only paid on the added value, making it a fairer system for businesses and consumers alike. 📈 Conditions to Apply: > Goods must be purchased from a non-VAT registered person or a taxable person who calculated VAT based on the profit margin. > Input tax must not be recovered on these goods. A taxable person will not be allowed to apply the profit margin scheme in cases where they have issued a tax invoice or any other document mentioning an amount of VAT chargeable in respect of the supply.   #VAT #UAE #ProfitMarginScheme #Taxation #BusinessEfficiency #FinancialManagement