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Get Up To 70% Off On Your Tax Violation: Deadline June 28, 2021

The UAE’s Federal Tax Authority (FTA) declared that any person or group in the country has the right to apply to reduce or seek exemption from the penalty imposed for violating the country’s tax laws.

UAE VAT Fines and Penalty Relief
UAE Government on April 28, 2021 issued Cabinet Decision No. 49 of 2021 significantly reducing the quantum of penalties across various categories of violations. The three key changes were:

1. Reduction in late payment penalty from 1 per cent per day to 4 per cent per month.2. No late payment penalty on voluntary disclosure if tax is paid within 20 days of its submission.3. Introduction of amnesty scheme enabling a reduction in unpaid past penalties by 70 per cent.
The Effective date for implementation of this new changes is expected to be 28th Jun 2021.The Decision reduces many administrative penalties imposed on the violation of tax laws post 28 June 2021. The Decision allows registrants who have been penalized prior to the effective date of the Decision to benefit from a penalty redetermination scheme, where they would only be required to settle 30% of their payable administrative penalties outstanding on 28 June 2021 subject to meeting the requirements specified in the Decision.

Amnesty
The UAE Government has also introduced an amnesty scheme through this, where unpaid penalties that were levied under the previous Cabinet Decision No. 40/2017 can be reduced by 70 per cent provided the taxpayer discharges the unpaid tax and 30 per cent of total penalties by December 31, 2021. While further details are awaited about the scheme and its application, it also needs to be seen whether it could apply to cases pending under litigation.
The reduction in penalties is a step in the right direction as it should result in significantly higher compliance among businesses, consequently leading to increased tax collections for the Government.

VATBOX : FTA Certified Tax Agents in UAE
The reduction in fines is a positive move since it should lead to better compliance among firms and, as a result, improved tax revenue for the government.
VATBOX is one of the leading Tax agents by FTA. By assuring compliance, VATBOX will assist you in avoiding all types of VAT and excise tax fines. Our tax professionals will do a tax health check to identify any anomalies and correct them as soon as possible. Contact us if you or your company is facing FTA fines and penalties. We will work with you to reduce the penalty and obtain the best possible outcome.


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Anti-Money Laundering (AML) Compliance in the UAE

What Is Anti Money Laundering (AML)?
Anti-money laundering (AML) applies to rules, legislation, and practices aimed at preventing suspects from passing off improperly acquired funds as lawful earnings. Anti-money laundering legislation can only apply to a small set of transactions and illegal behavior, but their consequences are far-reaching. AML laws, for example, force banks and other financial institutions that issue credit or accept consumer deposits to conform to guidelines that prevent money laundering.

AML applies to activities in four categories
Brokers and Real Estate Agents dealers of precious metals and gemstones Auditors Corporate service providers Compliance with Anti-Money Laundering and Combating Financing of Terrorism laws (AML-CFT) has been critical for UAE companies under above mentioned categories with fines ranging up to AED 1 million. However, most businesses have no idea how to measure their performance in terms of AML compliance. Several requirements have been mapped out by competent authority such as the UAE Central Bank and the Ministry of Economy to assist businesses in ensuring AML-CFT compliance.
However, business owners should be aware that eliminating fines should not be their primary goal when attempting to ensure AML enforcement in the UAE. Simply reaching the bare minimums would not help you accomplish the original goal of AML-CFT rules, which is to prevent offenders from escaping with ill-gotten monetary gains. Businesses should strive to incorporate processes that are both flexible, efficient and cost-effective.

Red Flag Indicators for AML-CTF?
It's important to take care of the red flag signs that a transaction may be suspicious and to respond on them. You will need to learn more about the consumers in some situations. If the consumer inquiries don't clear it up, the Money Laundering Reporting Officer (MLRO) should determine if this is something that should be included in a Suspicious Activity Report (SAR) and, if appropriate, presented to the Financial Crimes Enforcement Network (FinCEN).
Financial institutions may use red flag metrics to help them adapt a risk-based approach to CDD criteria, such as identifying who the recipients are and where the funds come from. Regulators may presume money laundering (ML) or terrorist funding (TF) if a red flag signal is present. The following Red Flags in the Funding Fund for Money Laundering and Terrorism were also outlined in the Financial Action Task Force FATF Report.

Review AML Compliance System with VATBOX Team
VATBOX team can conduct independent assessments of the Anti-Money Laundering (AML), Combating the Financing of Terrorism (CFT)& Restrictions Compliance Frameworks. Our team of experienced professionals can assist you in complying with the new Anti-Money Laundering and Combating the Financing of Terrorism (CFT) regulations. Contact us for AML compliance services in UAE to fight money-laundering with the best regulatory practices.


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VAT ON ECOMMERCE BUSINESS IN UAE

VAT on e-commerce in the UAE is assessed based on the location of the seller and the receiver. Online sales will be subject to a 5% VAT in UAE. In the field of e-commerce, buying products from an electronic channel, such as a website or a marketplace, is referred to as a supply of goods. After the items have been imported, they are shipped to the receiver.
The supply may take any of the following simple types, depending on the location of the source, the consumer, and the goods:
(i)A supply made by a resident seller to a recipient in the UAE, with products supplied from inside or outside the UAE;(ii)A supply by a resident supplier to a recipient outside the UAE, with products shipped from within or outside the UAE; (iii)A supply by a non-resident supplier to a recipient within the UAE, with goods delivered from within or outside the UAE;(iv)A non-resident supplier's supply to a recipient outside the UAE, of products supplied from either within or outside the UAE.
The retailer must consider the effect of VAT on the selling of products in any of the situations mentioned above. Furthermore, where the products are physically transported into the UAE from anywhere other than the UAE.

Impact of VAT on E-commerce Business
The Federal Tax Authority (FTA) has clarified that all sales made through online shopping sites are subject to the same 5% Value Added Tax (VAT) as any other purchase made through conventional channels provided the items are delivered within the UAE.
As per the Article (18) of Decree Law, a non-resident supplier shall register for tax and makes supplies of goods or services, there is no threshold limit applicable to the non-residents. “This means if a consumer in the UAE buys a service/product from an online platform (social media, e-commerce, education, games, arts, fashion, music or any other services); the non-resident supplier shall register for the VAT within the stipulated time and comply with local tax legislation.

VAT Treatment on E-commerce Sales
The Federal Tax Authority of the United Arab Emirates issued guidance on the value added tax (VAT) treatment of e-commerce transactions and electronic services. The advice also addresses the tax authority's VAT status.
Apps, e-games, e-subscriptions, smart phone apps, and e-content are examples of physical products and computer resources that are subject to strict laws that govern how VAT is applied to them.
(a) Sales and purchases of goods or services through e-commerce within the UAE are called domestic sales and are subject to the normal 5% VAT limit.
(b) Purchases of goods or services from outside the UAE are subject to the normal 5% VAT fee.
If the purchaser of products or services is in the UAE and registered for VAT (as a taxable person), the recipient is expected to determine the normal 5% VAT using the reverse charge process, in which the taxable recipient calculates the due VAT instead of the non-resident seller.If the receiver is an end customer (i.e. not registered with the tax authorities for VAT), the agent or logistics firm charges and pays the usual 5% VAT to the authority. For all imports on behalf of a non-registered person, the agent (who supplies/imports) would be responsible for complying with UAE VAT.


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BOOKKEEPING SERVICES IN UAE

Bookkeeping handles the recording of day-to-day financial transactions and information. Bookkeeping is key component of an accounting system that helps to retain every transaction and information relating to the organization where necessary. There are many ways that accounting and bookkeeping services can help your business; in fact, accounting and bookkeeping is mandatory for every organization to have a steady functioning of business.
Bookkeeping outsourcing has become very essential part of every business in the current situation. Outsourcing of bookkeeping services in UAE will help you to maintain your existing clients and divert your focus to the core function of business development.

Functions of a bookkeeper in UAE
A bookkeeper assists with the creation and maintenance of the entity's overall financial and management structures. On a regular basis, a bookkeeper keeps track of the ledgers and tracks all of the organization's financial transactions. The bookkeeper records any account, whether it's a gain or loss, in the ledger.
These transaction documents are used to understand the company's financial situation. Bookkeeping systems help you stay on top of the company's financial situation. It aids in cost reduction, and the bookkeeper can be super cautious in preventing errors in the books of accounting records. They will keep you informed about fines, taxation, and punishments, as well as mismanagement and wasteof supplies and inventories.

How does outsourcing of bookkeeping help your business in UAE
Any company in the UAE is expected to keep proper books of records, regardless of its scale, so bookkeeping services are required for all types of businesses. Normally, people hire bookkeepers, but nowadays, the majority of companies tend to outsource those services. Outsourcing can be beneficial in a variety of respects.
When you outsource, you're not only hiring one person, but a whole team of highly trained and seasoned individuals. When these processes are in the hands of experts, businesses don't have to think about them. They will be able to focus further on their main operations.
In terms of technology, the outsourced accounting firm can use the most sophisticated and cutting-edge technology used to measure and report the records. The outsourcer would ensure that reliable data is brought in and that the data is protected.

VATBOX provide bookkeeping and accounting services in UAE
Accounting is the process of tracking income and expenses. Bookkeeping services is the process of keeping records of financial transactions and preparing financial statements, such as balance sheets and income statements. Bookkeepers and accountants sometimes do the same work. But in general, a bookkeeper's first task is to record transactions and keep you financially organized, while accountants provide consultation, analysis, and are more qualified to advise on tax matters.
Vatbox is one of the leading accounting and bookkeeping service providers in Ajman, Sharjah and all over UAE. Vatbox offers customized Accounting & Business services and customer support. We improve company performance with increased flexibility to respond to growing business requirements. Call us today at VATBOX UAE to ensure complete compliance with Accounting, bookkeeping and VAT regulations in the UAE! With competitive fees, our team offers a wide variety of VAT accounting solutions that can assist your UAE business.


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VAT RETURN FILING FOR BUSINESSES IN UAE

The first Value Added Tax (VAT) return provided the Federal Tax Authority (FTA) with a pleasant period for filing to ease reporting and regulatory pressure on businesses. All companies must log on to the website of the FTA and verify under their profile the tax period. The first VAT return period was given to some of the companies for one month, while the first VAT return was given to most of the companies for the first month.

How to file VAT Return in UAE
VAT returns should be prepared well in advance by a taxable person as he is expected to file the VAT return online in the 'VAT 201' form on the FTA portal. There is currently no facility available on the FTA portal for offline filing of tax returns. The taxable individual must correctly fill in the VAT 201 form and provide sales, purchase, input VAT and output VAT information.There are seven sections, as mentioned below in the VAT 201 form:
Taxable Person detailsInformation as to Tax Registration Number / TRN of the taxable person and contact information. If a Tax Agent is submitting the tax return on behalf of the taxable person, then the information about Tax Agent Approval Number / TAAN) and Tax Agency Number / TAN along with the Tax Agent name and Tax Agency name gets automatically populated.Value Added Tax return periodInformation as to VAT Return Period, VAT Return Due Date, Tax Year-End, and VAT Return Period Reference Number. VAT on sales and all other outputsIn this section of VAT Return, the taxable person has to provide information as to standard rated tax supplies in different emirates including Abu Dhabi, Dubai, Sharjah, Ajman, Umm al Quwain, Ras Al Khaimah, and Fujairah. Further, detail as to tax refunds provided to tourists under the Tax Refunds for Tourists Scheme should be provided. It is also necessary to provide information as to exempt supplies, zero-rated supplies, goods imported into the UAE, and adjustments to goods imported into the UAE.VAT on expenses and all other inputsIn this section of Tax Return, you have to furnish information on standard rated expenses, and supplies subject to reverse charge provisions.Net VAT dueThis section requires furnishing information on the total value of due tax for the period, the total value of recoverable tax for the period, and payable tax for the period.Additional reporting requirementsAdditional reporting requirements are only applicable to taxable persons who have applied the provisions of the Profit Margin Scheme during the taxable period. Others may simply say tick ‘No’ and skip to the next section.Declaration and authorized signatoryThis section requires the taxable person to declare that information provided in the VAT return is factually correct, accurate, and complete to the best of his knowledge. Hence, utmost care should be taken while preparing the VAT filing. The taxable person has an option to save the draft tax return and submit it later.
VAT Return Fines & Penalties
Failure to keep the required records specified by the tax procedures law and the tax law - AED 10,000 for the first time and AED 50,000 for each repeat violation.Failure to submit the required records in Arabic when requested by the Authority. - AED 20,000 Failure to submit a registration application within the timeframe specified by the tax law - AED 20,000Failure to submit a deregistration application within the timeframe specified by the tax law - AED 10,000 Failure to inform the Authority of an amendment to tax records that needs to be submitted - AED 5,000 for the first time and AED 15,000 in case of repetitionFailure to notify the authority that a legal representative has been appointed for the business within the specified timeframe. The penalties will be charged to the legal representative. - AED 20,000 Failure of the legal representative to file a tax return within the specified timeframe. The penalties will be charged to the legal representative - AED 1,000 for the first time and AED2,000 in case of repetition within 24 months Failure of the Registrant to submit a tax return within the time frame specified by the tax law - AED 1,000 for the first time and AED 2,000 in case of repetition within 24 months Failure to pay the tax stated in the tax return/tax assessment form within the time frame specified by the tax law. The taxable person will incur a late payment penalty as follows:- 2% of the unpaid tax is due immediately, 4% is due on the seventh day following the deadline for payment and 1% daily penalty will be charged on any amount that is still unpaid one calendar month after the deadline for payment, up to a maximum of 300%.Submission of incorrect tax returns.Two penalties are applied:
•Fixed penalty of:- (AED 3,000) for the first time and (AED 5,000) in case of repetition
• Percentage-based penalty shall be applied on the amount unpaid to the Authority due to the error as follows:- (50%) if the Registrant does not make a voluntary disclosure or he made the voluntary disclosure after being notified of the tax audit and the Authority has started the tax audit process, or after being asked for information relating to the tax audit, whichever takes place first, (30%) if the Registrant makes a voluntary disclosure after being notified of the tax audit and before the Authority starts the tax audit and (5%) if the Registrant makes a voluntary disclosure before being notified of the tax audit by the Authority.Voluntary disclosure by a business of errors in a tax return, tax assessment, or refund application.Two penalties are applied:
• Fixed penalty of:- (AED 3,000) for the first time and (AED 5,000) in case of repetition
• Percentage-based penalty shall be applied on the amount unpaid to the Authority due to the error as follows:- (50%) if the Person/Taxpayer makes the disclosure after either of the following conditions applies: a) they have been notified of the tax audit and the Authority has started the audit process, or b) they have been asked for information relating to the tax audit.”, (30%) if the Person/Taxpayer makes a voluntary disclosure after being notified of the tax audit but before the start of the tax audit and (5%) if the Person/Taxpayer makes a voluntary disclosure before being notified of the tax audit by the Authority. Failure of a business to voluntarily disclose errors in a tax return, tax assessment, or refund application before a tax audit. Two penalties are applied:
• Fixed penalty of:- (AED 3,000) for the first time and (AED 5,000) in case of repetition
• 50% of the amount unpaid to the Authority due to the error. Failure of a person or business to facilitate the work of the tax auditor - AED 20,000Failure of the Registrant to calculate tax on behalf of another person as required under the tax law. The Registrant shall incur a late payment penalty as follows:- 2% of the unpaid tax is due immediately once the payment is late, 4% of the amount of tax which is still unpaid is due on the seventh day following the deadline for payment and 1% daily penalty will be charged on any amount that is still unpaid one calendar month after the deadline for payment, up to a maximum of 300%. Failure to account for tax due on import of goods as required under the tax law - 50% of unpaid or undeclared tax.
Call us today at VATBOX UAE to ensure complete compliance with VAT regulations in the UAE! With competitive fees, our team offers a wide variety of VAT accounting solutions that can assist your UAE business.


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VAT Accounting In UAE

A value-added tax (VAT) is a consumption tax placed on a product whenever value is added at each stage of the supply chain, from production to the point of sale. The amount of VAT that the user pays is on the cost of the product, less any of the costs of materials used in the product that have already been taxed. If simple tasks are completed on time and correctly, VAT is not an expense to the company. VAT is a type of indirect tax, where you are allowed by the government to be an agent to collect and pass taxes to the government. The tax (VAT) levied on purchases is payable to the government and the tax (VAT) charged on the purchase account is payable to the government. Hence, the difference is either payable to, or receivable from, the government.

VAT Accounting Procedures in UAE
VAT is a transaction tax and therefore affects various procedures within your company. As a result, there is a need for VAT accounting steps and controls, which are:
Master data of suppliers and customers to the business, knowledge of their establishment position Tax coding of transactions Inventory mastersSales and purchase schemes of accounting entriesGeneral ledgerVAT recording and reporting
If any of these areas are covered by a lack of ownership, regulation, or perceptibility, this can affect the submission of VAT returns and financial statements. You may be subject to heavy fines and penalties if the data is not correctly given.

Benefits of VAT Accounting
You have a good understanding of what VAT is all about and what its forms are. Why is VAT accounting relevant is the question that could linger in your mind? The answer is as shown below:
Easy Tax Returns
Through carrying out VAT accounting, a corporation would be able to access all the necessary documentation relating to tax reporting at a single venue, thus significantly improving the process of filing the company's tax return.
Provides Flexibility
Vat accounting would include the approximate gross amount that needs to be charged in the form of taxes if a corporation chooses to expand it. The company's management will go through the VAT accounting study, and it can decide to expand the business according to the set budget.
Tracks of VAT records
VAT accounting helps the organization and the authorities concerned to verify whether or not all tax-related records are submitted. It acts as a checklist consisting of the names of the materials to be filled out and submitted correctly.
Lowers the Risk of Tax Audit
The company will have the data linked to all the transactions conducted by the company by using VAT accounting. The chances of a tax audit being undertaken by the authorities concerned would be significantly decreased.
Reduces the Risk of Penalties
VAT accounting would ensure that the organization complies with all the laws and regulations set by the authority concerned, which would minimize the possibility of the government penalizing it. It will also keep changing the procedures for accounting for VAT over time.
Creates Awareness for VAT Related Schemes
The government keeps bringing in new Value Added Tax schemes from time to time. VAT accounting will create awareness among businesses about how different businesses would profit from the benefits.
Boosts National Revenue Growth
For the economy of a region, VAT is a critical instrument of revenue generation. VAT accounting is a mechanism by which the total amount of taxes to be charged by a corporation is measured and registered, and if not done correctly, the overall economy of the country will be tremendously affected.

VAT Consultants in UAE
Vatbox, the leading VAT consultants in the UAE, have extensive experience in carrying out evaluations of the VAT accounting process to ensure that businesses meet their VAT compliance needs as outlined in the UAE. Similarly, other VAT laws and accounting requirements need to be met as well.
Call us today at VATBOX UAE to ensure complete compliance with VAT regulations in the UAE! With competitive fees, Our team offers a wide variety of VAT accounting solutions that can assist your UAE business. Along with VAT consulting in the UAE, we also provide accounting and auditing services. We partner with you to complete the bookkeeping phase of your business and VAT requirements.


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VAT Administrative Exceptions

A VAT Administrative Exception is a mechanism which provides registrants with concessions / exceptions allowed by the Federal Decree-Law No. 8 of 2017 on Value Added Tax (“Law”) or Cabinet Decision No 52 of 2017 on the Executive Regulations of the Federal Decree-Law No. 8 of 2017 on Value Added Tax (“Executive Regulations”) if difficult circumstances prevent them from following certain procedural aspects of the Law or the Executive Regulations. However, VAT and Excise Tax registration exceptions are not covered under this process. The registrant must submit the VAT Administrative Exception Request by email to specialexceptions@tax.gov.ae by himself or through a registered Tax Agent or an appointed Legal Representative.
Applicants are required to submit the below information along with the form: the category for which you are seeking a VAT Administrative Exception;a detailed description of why you are making a VAT Administrative Exception Request as per the criteria outlined above; andany documentary proof to support the factual and legal grounds on which the request is based (e.g. sample invoices, contracts, payment slips or other). This is based on the category of the Exception.      
VAT Administrative Exceptions are grouped into the following categories and are relevant to VAT only:   
Tax InvoicesTax Credit Notes Length of the Tax PeriodStaggerExtension of time for the export of goods      


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Economic Substance Regulations (ESR)

UAE Cabinet issued the Cabinet of Ministers Resolution No.31 of 2019 for Economic Substance Regulations issued Subject On 30 April 2019. The Regulations apply to all UAE onshore and free zone companies that carry on a "Relevant Activity". It is yet to be confirmed whether the Regulations will also apply to sole proprietorship and branches, but we expect entities incorporated under offshore (free zone) companies regulations that carry on a “Relevant Activity” to be within the scope of the Regulations.
The following are considered as “Relevant Activities” under the Regulations:
Banking BusinessesInsurance Businesses Investment Fund Management Businesses Lease-Finance Businesses Headquarter Businesses Shipping Businesses Holding Company Businesses Intellectual Property Businesses Distribution and Service Center Businesses 
The UAE economic substance regulations apply to Licensees with a financial year commencing on or after 1 January 2019.A Licensee that is directly or indirectly owned 51% or more by the UAE government is exempt from this regulations. In this respect, the “UAE government” includes the UAE Federal Government, as well as governments of any Emirate of the UAE.

To satisfy the economic substance requirements in relation to a Relevant Activity, a Relevant Entity must:
Conduct the relevant “core income generating activities” (CIGA) in the UAE;Be “directed and managed” in the UAE; andWith reference to the level of activities performed in the UAE:                   - Have adequate number of qualified full-time employees in the UAE
                   - Incur an adequate amount of operating expenditure in the UAE
                   - Have adequate physical assets in the UAE.

A Relevant Entity that only undertakes a Holding Company Business will be subject to less stringent economic substance requirements. Additional requirements apply if a Relevant Entity carries out “high risk IP related activities”. If a Relevant Entity carries out more than one Relevant Activity, the economic substance requirements must be met for each of the Relevant Activities.

Failure to comply with the Economic Substance Regulations in UAE (ESR UAE) can let you face Penal Consequences in nature of administrative fines and other consequences such as:
Financial Penalty ranging from AED 10,000 to AED 50,000 (in first year of non-compliance)Suspension of LicenseRevocation of LicenseNon-Renewal of License


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COVID-19 Alert!

The 2019–20 coronavirus pandemic is an ongoing pandemic of coronavirus disease 2019 (COVID-19). The outbreak started in December 2019. The World Health Organization (WHO) declared the outbreak to be a Public Health Emergency of International Concern. Nearly 209 countries with more than 1.5 million confirmed cases recorded so far.
The pandemic has led to severe global socioeconomic disruption,the postponement or cancellation of sporting, religious, and cultural events, and widespread fears of supply shortages resulting in panic buying. Schools and universities have closed either on a nationwide or local basis affecting approximately 91.3 percent of the world's population.
Considering this crisis situation, VATBOX decided to follow the Ministry of Health and Prevention - UAE's declaration to fight against the pandemic - #StayHome #SaveLives
In roder to avoid the direct contact and human gathering we decided to serve you through our online platform. Please visit our Digital Tax Clinic -(https://www.vatboxuae.com/taxClinic.php) to send all your Tax , Accounting and Auditing requests and queries your to our expertise of team.
#JoinHandsToBeatThePandemic


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Value Added Tax and Designated Zones

Cabinet Decision No. (43) of 2019 on Amending the List of Designated Zones Annexed to the Cabinet Decision No. (59) of 2017 on Designated Zones for the purposes of the Federal Decree-Law No. (8) of 2017 on Value Added Tax (effective 4 July 2019).

Designated Zones are:
1. Subject to strict control criteria;2. Required to have security procedures in place to control the movement of goods and people to and from the  Designated Zone;3. Required to have Customs procedures to control the movement of goods into and out of the Designated Zone4. Treated as being outside the territory of the UAE for VAT purposes for certain supplies of goods.
Although an area might be identified as a Designated Zone, it is not automatically treated as being outside the UAE for VAT purposes. There are several main criteria which must be met in order for a Designated Zone to be treated as outside the UAE for VAT purposes. These are as follows:1. The Designated Zone must be a specific fenced geographic area.2. The Designated Zone must have security measures and Customs controls in place to monitor the entry and exit of individuals and movement of goods to and from the Designated Zone.3. The Designated Zone must have internal procedures regarding the method of keeping, storing and processing of goods within the Designated Zone.4. The operator of the Designated Zone must comply with the procedures set out by the FTA.
A Designated Zone has areas that meet the above requirements, and areas that do not meet the requirements, it will be treated as being outside the UAE only to the extent that the requirements are met. In addition, should a Designated Zone change the manner of its operation or no longer meet any of the conditions imposed on it which led to it being specified as a Designated Zone by way of the Cabinet Decision, it shall be treated as though it is located within the territory of the UAE.
Businesses which are established, registered or which have a place of residence within the Designated Zone are deemed to have a place of residence in the UAE for VAT purposes. The effect of this is that where a business is operating in a Designated Zone, it itself will be onshore for VAT purposes, even though some of its supplies of goods may be outside the scope of UAE VAT.
Designated Zone businesses are considered to be established ‘onshore’ in the UAE for VAT purposes. This means that they have the same obligations as non-Designated Zone businesses and have to register, report and account for VAT under the normal rules. It also means they can join a tax group (VAT group) provided they meet the required conditions. However, in certain instances, an area of a Designated Zone will be effectively treated as ‘offshore’ for VAT purposes, i.e. as if it is outside of the territory of the UAE for the purposes of the tax.
Since UAE VAT only applies on supplies made in the UAE, the special treatment of Designated Zones will affect the VAT treatment of supplies made within Designated Zones.

The following flow chart describes the treatment of supply of goods or services in a designated zone:


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Value Added Tax and Imports

Imports are taxable under VAT. When a person registered under VAT in UAE imports goods or services, the importer has to pay VAT on imports on reverse charge basis. This is in addition to customs duty levied on imports. The scenarios of import can be divided as follows:1. Import by a person registered under VAT2. Import by a person not registered under VAT3. Goods trans-shipped via UAE to other GCC countries4. Goods imported to UAE and exported to other countries
All importers in UAE should register for VAT before 31 December 2017 if their taxable supplies made and imports received exceed AED 375,000 for the last 12 months. Registration for VAT purposes will mean that an importer can defer payment of VAT, so payment shall be due on submission of the return (28 days following the tax period in which the import happened). From 1 January 2018, import of goods that are subject to VAT into the UAE will be affected as follows:

If the Importer wants to pay the VAT on Import he can pay through one of the certified import clearance companies registered with the Federal Tax Authority (FTA) by  Submitting the customs declaration in the FTA e-services portal and also if the Importer wants to provide e-Gurantee he can apply  by , Submitting the customs declaration through the FTA e-services portal.

When a supply is made, usually, the supplier of goods or services is liable to collect and pay tax to the Federal Tax Authority (FTA). This is called forward charge. Under reverse charge, the recipient of the supply is liable to pay the tax on the supply to the Federal Tax Authority. In the case of imports, as the supplier is outside UAE and is hence, not registered in UAE, the liability to pay tax on the import is on the importer registered under VAT in UAE.

On imports, VAT rate of 5% will be applicable. The only exception is import of precious metals, on which VAT rate of 0% is applicable. The rate of VAT applicable on imports is kept same as the VAT rate applicable on domestic supplies, in order to ensure that imports are taxed equally as domestic supplies and the tax paid by the recipient of the supply on imports is eligible for input tax recovery.  The records of imports are required to be maintained for a minimum of 5 years from the end of the year to which the invoices pertain.


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Input VAT Recovery

Input tax is the tax paid by a person on purchases or inward supplies. This means that a person can reduce the value of input tax eligible for recovery from the tax payable and only pay the balance amount as tax.

A registered business can recover the VAT paid on purchase of goods and services used for business purposes subject to following conditions according to Article number 55 of Executive Regulations.The purchases should be used to make Taxable supplies of the business.Recipient receives and keeps the Tax Invoice - The recipient claiming input tax recovery on a supply should ensure that the Tax Invoice pertaining to the supply is received and kept in the records. The Tax Invoice should show the details of the supply related to the input tax recovery being claimed.Recipient pays or intend to pay the consideration for the supply - The recipient claiming input tax recovery should pay or intend to make the payment of consideration for the supply within 6 months after the agreed date of payment for the supply.There are certain supplies on which input tax recovery is not allowed:Supplies used to make exempt supplies - Certain supplies are declared as exempt in the VAT Law, such as supply of local passenger transport, supply of bare land, etc. A registered business cannot recover tax paid on purchase of inputs used to make these exempt supplies.Entertainment services provided to non-employees - Registered businesses cannot claim input tax recovery on entertainment services provided to non-employees. These non-employees can include customers, potential customers, officials, shareholders, owners or investors.Motor vehicles used for personal use - If a registered business has purchased, rented or leased motor vehicles for use in the business but it was used for personal use by a person in the business, then the tax paid on purchase, rent or lease of the motor vehicle cannot be recovered.Goods or services purchased for use by employees - Registered businesses cannot claim input tax recovery paid on goods and services purchased for use by employees, for which no charge is paid by the employees and it is for their personal benefit.Article 55 of the Executive Regulation provides a second opportunity to the taxable person to deduct the recoverable input tax in the immediate subsequent tax period if he missed out to claim the input tax in the first tax period in which the both conditions of claiming the Input VAT is satisfied. But if Input VAT was not recovered in the first two eligible tax periods, a taxable person may submit a voluntary disclosure to recover such Input VAT if required. And in such cases the provisions related to the Voluntary Disclosures like the time period within which the voluntary disclosures shall be submitted, penalty for submitting the Voluntary Disclosure are applicable.


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TRN De-Registration

A registered taxable person is required to comply with the required rules and processes under VAT. Invoices have to be issued in the specified format, returns need to be filed on a timely basis and the tax due needs to be paid by the due date. The VAT Law provides registered taxable persons with the facility to cancel their VAT registration. 
Let us understand the circumstances in which a person can de-register under VAT and the process to be followed for the same.
The Registrant must apply to the Authority for de-registration in any of the followings occurrence:
1) Business No Longer Making taxable Supplies - The Registrant stops making supplies referred and does not expect to make any such supplies over the next 12-month period.2) Business Making Taxable Supplies but below Voluntary Threshold - The 12 months have elapsed since the date of registration, The value of supplies made, or taxable expenses incurred, by the Registrant over the previous 12-months is less than the Voluntary Registration Threshold and the taxable supplies or expenses, expected over the next 30 days, are not expected to exceed the Voluntary Registration Threshold.3) Business Making Taxable Supplies below Mandatory Threshold but Above Voluntary Threshold - After the 12 months have elapsed since the date of registration if you were registered on a voluntary basis, The Registrant still making Taxable Supplies but the value in the previous 12 months was less than the Mandatory Registration Threshold and the taxable supplies or expenses,expected over the next 30 days, are not expected to exceed the Mandatory Registration Threshold.
The date from which the Taxable Person is required or eligible to de-register depends on above basis of the de-registration:
If the de-registration application is reviewed and approved by the Authority, they may give a Last VAT Return Period for filing to the applicant. Then, the de-registration is effect from the last day of the Tax Period during which the Registrant has met the conditions for de-registration or from such other date determined by the Authority as the ending of Last VAT return period.
A Registrant shall not be de-registered unless he has paid all Tax and Administrative Penalties due and filed all Tax Returns as due.
De-registration does not exempt the Person from his obligations and liabilities that were applicable under the Decree-Law while he was still a Registrant.
The Administrative Penalty of AED 10,000 will be imposed by the Authority for the failure of the Registrant to submit a de-registration application within the time frame specified above in each basis of de-registration.


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VAT Registration with FTA

Abu Dhabi, November 29, 2017 – The Federal Tax Authority (FTA) has called on natural and legal persons exercising business in the UAE to expedite their registration process for Value Added Tax (VAT) to avoid the risk of missing the January 1, 2018, deadline.
Mandatory Turnover for Registration: This applies to businesses whose taxable supplies and imports of goods and services exceed AED 375,000 over the previous 12 months. Taxable supplies are identified as all supplies of goods and services made by a Person that are not exempt.
Voluntary Turnover for Registration: Taxable supplies and imports of goods and services exceeds AED 187,500 over the previous 12 months.
The FTA has urged businesses to provide accurate information and make sure they enter it properly into the application form. To complete the registration process, scanned documents must be attached, including the business or trade licence, passport/Emirates ID (for UAE residents) of the manager or owner of the business, and the authorised signatory (if the signatory is not the manager him/herself), as well as proof of authorisation for the manager or signatory (e.g. articles of association, power of attorney attested by notary, etc.).
Issuance of TRN: Issuing a Tax Registration Number (TRN) may require up to 20 working days or less. Therefore, and in order to ensure that the application is processed – and the TRN issued before January 1, 2018 – the FTA urges businesses to complete their registration to avoid the administrative penalty of AED 20,000, as well as additional penalties related to late payment of tax , according to the Cabinet Decision No. (40) of 2017 on Administrative Penalties for Violations of Tax Laws in the UAE.
Documents Required for Registration:-1.Copy of Trade License2.Passport copy of the owner/ authorized partner who owns the license3.Copy of emirates ID of the owner/ authorized partner who owns the license4.Memorandum of Association (MOA) / Power of Attorney (POA)5.Contact Details of company (complete address & P.O Box)6.Concerned person contact details7.Bank Details including IBAN8.Income statement for the last 12 months (Signed & Stamped by the owner or the manager)9.Expected revenue and expense for the next 30 days after VAT implementation10.Are they exporting or importing?11.Are they dealing with any custom department? If yes. What is the custom code? With the Copy of Dubai Custom Code Certificate.


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