VAT Services in UAE: where are we today?
Value Added Tax (VAT) introduced on 1 January 2018 in the UAE at the rate of the VAT is 5 percent, now, provides the UAE with a new source of income which will be used to provide high-quality public services. In general terms, VAT is an indirect tax. It is consumption tax added to a product’s or service’s sale price and the value of tax is directly proportional to the value of the products and services. VAT is an invoice-based system. Each seller charges a VAT charge on the buyer’s invoice which the seller then pays to the government.
Businesses are responsible for carefully documenting income, costs and associated VAT charges. Registered businesses and traders must charge VAT to all of their customers and incur VAT on goods/services that they buy from suppliers. The difference between these sums is reclaimed or paid to the government.
This introduction of the VAT changes the way businesses operate in the UAE and it requires your business to adopt updated accounting practices incorporating VAT. Our team is well-versed about these changes and can help your accounts be fully compliant with the new VAT taxation rules and regulations.