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VAT (Value Added Tax) has been implemented and is fully operational in the United Arab Emirates from January 01, 2018 with Companies registered with Federal Tax Authority (FTA) charging an additional 5% on their invoice.

VAT REGISTRATION

Registration for VAT is done online through the FTA portal. The application requires the applicant to enter details in English and Arabic and upload the required documents (which includes Trade License, Memorandum of Association, Passport and Emirates ID copies of the owners, Bank account details and other related documents).

AGX Auditing has assisted in the registration of over 300 Companies in UAE including group registration and obtaining the Tax Registration Number (TRN). Feel free to get in touch with our team to get your Company registered with the FTA.

INVOICING

As part of the VAT requirements, every invoice has begun adding 5% VAT to the value of Goods or services. From the customer’s perspective, one must ensure that the Invoice contains the name, address, and the TRN of the Company charging VAT and that the VAT amount is shown separately.

From the business perspective, the invoice should follow the prescribed requirements:

  1. The words “Tax Invoice” clearly displayed on the invoice.
  2. The name, address, and Tax Registration Number of the Registrant making the supply.
  3. The name, address, and Tax Registration Number of the Recipient where he is a Registrant.
  4. A sequential Tax Invoice number or a unique number which enables identification of the Tax Invoice and the order of the Tax Invoice in any sequence of invoices.
  5. The date of issuing the Tax Invoice.
  6. The date of supply if different from the date the Tax Invoice was issued.
  7. A description of the Goods or Services supplied.
  8. For each Good or Service, the unit price, the quantity or volume supplied, the rate of Tax and the amount payable expressed in AED.
  9. The amount of any discount offered.
  10. The gross amount payable expressed in AED.
  11. The Tax amount payable expressed in AED together with the rate of exchange applied where the currency is converted from a currency other than the UAE dirham.
  12. Where the invoice relates to a supply under which the Recipient of Goods or Recipient of Services is required to account for Tax, a statement that the Recipient is required to account for Tax, and a reference to the relevant provision of the Decree-Law.

Where the Recipient of Goods or Recipient of Services is not a Registrant or where the Recipient of Goods or Recipient of Services is a Registrant and the Consideration for the supply does not exceed AED 10,000 then the Company may issue a simplified invoice which shall contain:

  1. The words “Tax Invoice” clearly displayed on the invoice.
  2. The name, address, and Tax Registration Number of the Registrant making the supply.
  3. The date of issuing the Tax Invoice.
  4. A description of the Goods or Services supplied.
  5. The total Consideration and the Tax amount charged.

Any clarity or queries regarding the invoicing may be addressed to our team at AGX Auditing, and we will have the same cleared.

RETURN FILING

The Return will have to be filed within 28 days of the month following the return period as mentioned in the FTA portal and the TRN Certificate. The VAT collected per Emirate will have to be submitted into the return and the payment for the same after setting off allowable input credit shall have to be paid using E-Dirham card.

We at AGX Auditing will assist and provide necessary services for the submission of returns as per the FTA requirements.

DESIGNATED ZONES

Any Designated Zone specified by a decision of the Cabinet shall be treated as being outside the State and outside the Implementing States, subject to the following conditions:

  • The Designated Zone is a specific fenced geographic area and has security measures and Customs controls in place to monitor entry and exit of individuals and movement of goods to and from the area.
  • The Designated Zone shall have internal procedures regarding the method of keeping, storing and processing of Goods therein.
  • The operator of the Designated Zone complies with the procedures set by the Authority.

The following are the zones which upon satisfying the procedures will be recognized as a designated zone until further notifications:

ABU DHABI

1. Free Trade Zone of Khalifa Port
2. Abu Dhabi Airport Free Zone
3. Khalifa Industrial Zone

DUBAI

1. Jebel Ali Free Zone (North-South)
2. Dubai Cars and Automotive Zone (DUCAMZ)
3. Dubai Textile City
4. Free Zone Area in Al Quoz
5. Free Zone Area in Al Qusais
6. Dubai Aviation City
7. Dubai Airport Free Zone

Sharjah

1. Hamriyah Free Zone
2. Sharjah Airport International Free Zone

Ajman

1. Ajman Free Zone

Umm Al Quwain

1. Umm Al Quwain Free Trade Zone in Ahmed Bin Rashid Port
2. Umm Al Quwain Free Trade Zone on Sheikh Mohammed Bin Zayed Road

Ras Al Khaimah

1. RAK Free Trade Zone
2. RAK Maritime City Free Zone
3. RAK Airport Free Zone

Fujairah

1. Fujairah Free Zone
2. FOIZ (Fujairah Oil Industry Zone)

The transfer of Goods between Designated Zones shall not be subject to Tax if the following two conditions are met:

a. Where the Goods, or part thereof, are not released, and are not in any way used or altered during the transfer between the Designated Zones.
b. Where the transfer is undertaken in accordance with the rules for customs suspension according to GCC Common Customs Law.

When Goods are moved between Designated Zones, the Authority may require the owner of the Goods to provide a financial guarantee for the payment of Tax, which that Person may become liable for should the conditions for movement of Goods not be met. If supply of Goods is made within a Designated Zone to a Person to be used by him or a third person, then the place of supply shall be the State unless the Goods are to be incorporated into, attached to or otherwise form part of or are used in the production or sale of another Good located in the same Designated Zone which itself is not consumed. The Place of supply of Services is considered to be inside the State if the place of supply is in the Designated Zone.
Doubts pertaining to the same may be cleared by getting in touch with AGX Auditing.


VAT – queries regarding implementation and functioning

A lot of queries are being raised at the moment regarding the functioning of VAT; VAT, and for that matter tax, is a system and a concept which is new to the people in UAE. We at AGX are happy to give clear answers to the queries you are facing and will help to meet the challenge in the smooth implementation of VAT into your business operations.

Helpful Links:

1) Guides released by the FTA https://www.tax.gov.ae/help_guides.aspx
2) Legislation released https://www.tax.gov.ae/legislation.aspx