VAT Registration

Any business which exceeds mandatory or voluntary registration thresholds may be required or may be able to register for VAT.

Mandatory Registration

A business must register if the total value of its taxable supplies and imports exceeds the mandatory registration threshold over the previous 12 months, or the business anticipates that the total value of its taxable supplies and imports will exceed the mandatory registration threshold in the next 30 days.

The mandatory registration threshold is AED 375,000.

Voluntary Registration

A business may apply to register if it does not meet the mandatory registration criteria and the total value of its taxable supplies and imports or taxable expenses in the previous 12 months exceeds the voluntary registration threshold, or the business anticipates that the total value of its taxable supplies and imports or taxable expenses will exceed the voluntary registration threshold in the next 30 days.

The voluntary registration threshold is AED 187,500.

VAT Deregistration

VAT Deregistration is similar in significance to VAT registration in the UAE. The UAE has certain conditions that determine whether an individual or business has to pay VAT (Value Added Tax) or not. Upon the fulfillment of these stipulations, an individual or business must register with the FTA. When a registered party, known as a registrant, no longer satisfies the conditions for being subjected to VAT, they must deregister themselves. VAT deregistration needs to be done out in an allowed amount of time. Otherwise, authorities might penalize the registrant.

The process of VAT deregistration is more complicated than registering VAT with FTA; thus, it is highly recommended to ask for assistance from reliable accounting and tax consultancy firm.

CGMA Global Consultants is an experienced and reputable accounting and tax consultancy firm that has vast of experience when it comes to VAT. At CGMA, the registrant will be assured that the VAT deregistration is properly done.

Eligibility for VAT Deregistration in UAE Mandatory VAT Deregistration

When a business stops dealing in taxable supplies, or when their taxable supplies/expenses in the last year and the next 30 days don’t exceed the limit for voluntary VAT registration (AED 187,500), then deregistration of VAT in UAE becomes mandatory. Immediately, businesses should submit application for deregistration to avoid the chances of being fined or penalized. Registrants are only allowed to deregister themselves within 20 days from the date on which the business’s eligibility for being taxed is lost. Failure to submit the application in 20 days, business will be penalized. The penalty for late application is AED10,000/-.

Voluntary VAT Deregistration

If a business is dealing with taxable services and goods but the value of its taxable supplies has remained below the defined limit (AED 375,000) in the last 12 months, then a business can apply for voluntary deregistration of VAT in UAE. Also, if a business registered for VAT voluntarily, it may apply for deregistration after 12 months have elapsed since its voluntary deregistration.

Voluntary VAT deregistration does not have a defined time limit. Businesses that meet both of the above-mentioned conditions can apply for voluntary deregistration when they see fit.

Post-Submission

After you have completed your application, it will take the FTA some time to process and approve your application. You can check the progress of your application from your dashboard. You will also receive SMS and email notifications from the FTA as your application goes through processing.

Deregistration Status Details

After submission, your application will go through the following status states:

Pending: the deregistration request has been submitted by you and is awaiting processing approval from the FTA. The pending status will be applied once again after you submit any additional information that the FTA asks for.

Submitted: the FTA requires additional information from you.

Pre-approved: your application has been approved by the FTA and there are pending liabilities that you must pay off.

De-registered: your application has been approved, and there are no outstanding liabilities that need to be paid off.

**When you submit your application, it will be marked as “pending” on your dashboard. Once FTA accepts the application for processing, it will go from “pending” to “pre-approval” on your dashboard. As your application is processed, the FTA may ask you to submit a final tax return. You will be able to find this final tax return in your “VAT returns” section and it must be cleared before your application can be approved.

It should be noted that your application will not be approved if any outstanding liabilities or penalties remain unpaid.

Final Tax Return Submission

Final tax return will cover the latest tax period for which you were a registrant. The final tax period comes to an end on the effective date of the pre-approved deregistration.

Final tax return must be submitted and all liabilities associated with it must be paid within 28 days of the r effective deregistration date. If unable to meet this deadline, the business will be subjected to a penalty, and the de-registration process will be delayed.

The details of the final tax return must be checked and verified by the taxable party. The final tax return must include all transactions, including supplies for services and goods that are assets of the business being continued by the taxable party when they deregister. If business is continued by a selected trustee in bankruptcy pursuant (Federal Law No.7 on Tax Procedures, 2017), then such services and goods can be exempted.

Outstanding Liabilities

To complete and proceed with VAT deregistration, all outstanding liabilities must be settled.

Payable Position

If registrant has to pay a due amount, it can be done by going to the “My Payment” tab on the dashboard. In this tab, navigate to the “VAT & Penalty Payment” tab to see the amount that you must pay. Enter this amount in the “enter amount you want to pay” field and click on the “Make Payment” button.

After the payment has been accepted, you can go to the “De-Register” button on your dashboard and click it to complete the deregistration process.

Receivable Position

In case the business has a credit amount remaining by FTA, you can simply complete the deregistration process and request for a VAT refund through the online portal.

VAT Return Filling

Once the business is registered for VAT in UAE, the Company is required to file VAT return and make related VAT payments within 28 days from the end of the tax period.

VAT Reclaiming Services

VAT refunds can be claimed in a number of circumstances. You may be a taxable person in a net tax refundable position or someone who is eligible for refunds under the special schemes.

Refer to the detailed guidance on the conditions and requirements for VAT refunds below:

• VAT refunds for taxable persons.
• VAT refunds for foreign businesses.
• VAT refund for tourists.
• VAT refund for UAE nationals building new residences.
• VAT refunds for Foreign Governments, International Organizations & Diplomatic Bodies.

VAT Audit Facilitation

 A Tax Audit in UAE is conducted by the official representatives of the Federal Tax Authority (FTA). The objective of the tax audit is to determine the VAT compliance and to ensure that the tax liability is correctly determined and paid.

Businesses must prepare themselves for the tax audit by the FTA. Tax audit will verify the liability of VAT through examining the accounting and bookkeeping records and VAT return filings which are maintained by the taxpayer.

CGMA team will represent your business in front of the Federal Tax Authority (FTA). Our tax experts will ensure that everything is in line with the FTA’s laws and regulations. CGMA will manage all your VAT aspects and save your business from unnecessary fines and penalties.

CGMA is providing a VAT health check to ensure VAT compliance.  It is highly recommended to all VAT registered businesses to conduct a VAT health check at least twice a year to ensure that the business is compliant with updated tax laws and regulations.  CGMA is providing the best VAT health check services, which are in line with the standards and rules of the FTA.

CGMA Tax Consultants and Accountants will work all through with our clients to ensure:

• Client’s techniques/procedures are compliant with FTA regulations
• All Client’s staff are properly trained to record various types of business transactions such as tax invoices, provisions, journals, etc
• VAT returns are accurate, complete and error free
• Detailed audit is performed on VAT returns before submission

Penalty for Late-Registration under VAT

A punishment of AED 20,000 will be imposed on any company that misses the VAT Registration Number cutoff date or fails to complete the VAT registration process by the Federal Tax Authority’s deadline. This type of punishment can have a significant impact on a company’s bottom line.

Excise Tax Audit

Excise Tax is a form of indirect tax levied on specific goods. These goods are typically those that are harmful to human health or the environment. The intent of Excise Tax is to reduce consumption of these commodities while also raising revenues for the government that can be spent on public services.

 Excise Tax is currently applied on the following goods:

• Tobacco and tobacco products
• Liquids used in electronic smoking devices and tools
• Electronic smoking devices and tools
• Carbonated drinks (note that this excludes sparkling water)
• Energy drinks
• Sweetened drinks.

All businesses that import, produce or release excise goods from a designated zone must consider their registration requirements and compliance responsibilities related to filing and paying Excise Tax.

Excise Tax Audit

It is a process by which a registered taxable entity’s liability pertaining to excise tax is verified for a specified tax period. The purpose of the process of excise tax audit is to ensure whether the reported excise tax liability is correct and submitted to the tax authority within the date specified by the authority.

 The Federal Tax Authority (FTA) is entitled to conduct tax audit of a taxable person whenever it feels necessary. The audit can be performed at the registered office of the taxable entity, or the registered person can be called by the FTA to its offices for audit proceedings.

FTA is mainly responsible in determining which entities should be audited and at what time. The decision to select entities to be audited by the auditor is based on the risk level assessed by the authority with regard to error or tax fraud.

In what way an Excise Tax Audit is performed?

During the course of a Tax Audit, the auditor checks all the sites, inventories, records of the taxable person, etc., to assess the exact position of the taxable entity and to ensure whether the entity is in compliance with the Excise Tax laws in the UAE. The Auditor is entitled to take samples of original documents or copies of it as supporting evidence. The auditors can also take a sample of entity’s products for further review or as evidence. The auditor is also entitled to communicate and interact with entity’s staff members working in various departments like procurement, accounts, warehouse, logistics, etc., to understand and assess the nature of business and to confirm specific transactions.

What does a taxable entity need in case of an Excise Tax Audit?

A registered taxable entity or legal agent or tax consultant subject to Excise Tax Audit must fully cooperate with the auditor and should be present at all times during the tax audit.  The auditor must be permitted to enter the taxable person’s registered office(s) and should be given access to all documents related to excise audit.

HOW CGMA ASSISTS YOU? We are a Group of reputed audit, accountancy and tax consultancy firms operating in the UAE in partnership with our Capex Hassan Auditing being an approved Audit Firm by Authorities of UAE. Our team will ensure that prior the Excise Tax Audit conducted by FTA, the tax entity is well prepared with regards to all documents related to excise goods that are proven to be in compliance with the requirements of the UAE tax laws. Our team will also check the accuracy of tax calculated. At the same time, we will also perform a stock count on a particular date to verify the actual inventory by the taxable entity and quantify exceptions if found during the physical count. Aside from that, our team will also conduct trainings to the staffs related to tax audit to prepare them for future tax audit.

Records to be maintained as per Excise Tax Law in the UAE A registered taxable entity/ person is required to keep and maintain the following documents as per excise law in the UAE:

1. Records and supporting documents of all imported, produced or stockpiled Excise goods. b. Evidence of excise products sold outside the UAE. c. Supporting documents of excise goods exported outside the UAE. d. Detailed record of physical inventory held by the taxable person. e. Record of excise goods that either got lost or destroyed. f. Tax record with regards to tax due on excise goods imported by the taxable person in UAE. g. Tax record with regards to tax due on excise goods manufactured by the taxable person in UAE. h. Tax record with regards to tax due on excise goods that have been purchased or produced for the purpose of stockpiling. I. Evidence of tax deducted either in case of tax paid and submitted on excise goods sold outside the UAE or tax paid and submitted on excise product that is an integral component of another excise product on which is also subject to excise tax.

Reports required by the Tax Authority The auditor or FTA may require the taxable person to submit the following reports: • Report containing item wise details of excise goods physically kept by the taxable person in the context of value and quantity. • Report providing information relating to average monthly inventory held by the taxable person. • Report providing information relating to average monthly sales for each excise item. • Report containing details with regards to excise products manufactured by the taxable person. • Report containing details with regards to excise products purchased from outside the UAE (Import) by the taxable person. • All the above-mentioned reports for a one-year period prior to Excise Tax implementation.

The FTA may also require the following reports/ information from any taxable person registered for Excise tax in the UAE subsequent October 1, 2017, for the purpose of tax audit: • Item wise detail of Excise items produced and imported by the taxable person. • Item wise detail of Excise items sold locally or exported by the taxable person. • Item wise detail of Excise items released from the specified designated zone. • Detail containing name of companies and retailers to which the taxable person sells the excise products.

 Rights of a Tax Auditor during the Excise Tax Audit The auditor is entitled to require the following from the taxable person: • Original documents such as invoices, tax calculations, etc. • Copies of documents and supporting evidence. • Sample goods for review purposes.

 Rights of a taxable entity relating to Excise Liability during Tax Audit During the Tax Audit, the taxable person has the right to monitor while the documents are being removed by the auditor. In case the auditor removes any document or record during the proceedings of Tax Audit, the taxable person is authorized to get back the records or documents taken by the auditor once the tax assessment is finished. The taxable entity also has the right to demand and obtain receipt from the auditor against the removal of any record or document.