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Tax Consultants & Bookkeepers in the UAE

        

CORPORATE TAX AND VAT FAQ's

CORPORATE TAX FAQ's

D2) Will the income earned by a Freelance professional be subject to UAE Corporate Tax?

UAE Corporate Tax will generally apply to income earned from activities carried out under a freelance license / permit, albeit no Corporate Tax will be payable unless the annual net income of the freelance professional exceeds AED 375,000.

D3) Will a UAE Free Zone business be subject to UAE Corporate Tax?

Free zone businesses will be subject to UAE Corporate Tax, but the UAE Corporate Tax regime will continue to honor the Corporate Tax incentives currently being offered to free zone businesses that comply with all regulatory requirements and that DO NOT conduct business with the UAE mainland.

D4) Will a foreign company or an individual be subject to UAE Corporate Tax?

Foreign entities and individuals will be subject to UAE Corporate Tax only if they conduct a trade or business in the UAE in an ongoing or regular manner

D5) Will foreign Corporate Tax paid on UAE taxable income be recognised under the UAE Corporate Tax regime?

Foreign Corporate Tax paid on UAE taxable income will be allowed as a Tax credit against the UAE Corporate Tax liability

D6) Will a group of UAE companies be able to form a “fiscal unity” for UAE Corporate Tax purposes?

A UAE group of companies can elect to form a Tax group and be treated as a single Taxable person, provided certain conditions are met

VAT FAQ's

Expert VAT Opinions

A31) What details do I need to include on a tax invoice?

VAT legislation prescribes that whenever you make a taxable supply you must issue a tax invoice. Whether you need to issue a full invoice, or a simplified version depends on whether your customer is tax registered and the invoice value. However, you have an obligation to issue and deliver an invoice in all circumstances, so your customer telling you they don’t want one is irrelevant. Read more…

A5) Should VAT be charged on disbursements and reimbursements?

It’s quite a complicated issue from a VAT perspective where a third party is making payments on your behalf. Assuming they are VAT registered, the 5 per cent VAT on their fees is correct.

For the licensing body fees and out of pocket expenses you need to determine if these are classified as disbursements or recharged expenses. These two are treated very differently from a VAT charging perspective. Read more…

A25) When claiming input tax paid on goods bought before registration, is it necessary to hold goods after registration to claim that tax?

The law that covers when you can reclaim input tax paid prior to VAT registration is covered in Article 56 of the Decree Law. It says that you may recover VAT paid on goods and services, or paid on the import of goods charged in the previous five years, provided that these goods or services were used to make supplies that give the right to input tax recovery upon registration. Read more…

A40) Should I deregister from VAT if in the last 12 months, 80% of my company sales are exports and the remaining 20% is below AED 187,500?

VAT legislation states that a registrant must apply for de-registration if he stops making taxable supplies or if the value of taxable supplies in the last 12 months is less than the voluntary registration threshold of Dh187,500 and you do not expect to reach this threshold in the next 30 days. There are further conditions that if you registered voluntarily, you cannot deregister until 12 months after you registered. Once you have determined that you must deregister, you must apply to do so within 20 business days, effectively one calendar month. Read more…

A62) Is my service zero-rated if my customers live outside the UAE?

The basic rule for services is covered in Article 29 of the Decree Law, which says the place of supply is the supplier's residence. You then need to consider whether your supply is covered under any of the exceptions or special circumstances included in the legislation. When providing services to overseas customers, you may fall under the rules of Article 31 which allows zero-rating of certain services.

However, to be zero-rated several conditions must be met. The services should be supplied to a recipient who does not have a place of residence in an implementing state and who is outside that state at the time the services are performed. Read more...

 

FTA VAT FAQ's

No VAT on donations, grants, sponsorships in some cases: FTA

The Federal Tax Authority, FTA, has clarified that donations, grants and sponsorships are outside the scope of Value Added Tax, VAT, only when no benefit is received in return.

Any benefit in return for such payments will be subject to VAT, the authority said. Read more...

FTA clarifies VAT on healthcare of employees' families

The Federal Tax Authority issued a clarification on insurance that states that an employer would only be able to claim the input VAT on the health insurance provided to employees' families if it is the legal obligation of the employer to provide the insurance.

Pratik Shah, partner at Dhruva Advisors, said there is no legal obligation in Dubai on the employer to provide health insurance to the family of an employee, whereas Abu Dhabi mandates employers to provide such extended benefits. Read more...

Compensation payments are not subject to VAT, the Federal Tax Authority says

Companies and consumers in the UAE will not be taxed on payments listed in their business and legal contracts, such as a speeding ticket or a late-delivery fine, unless these payments are related to the supply of goods and services, according to the Federal Tax Authority. Read more...

FTA clarifies VAT for independent director fees

The Federal Tax Authority (FTA) has confirmed that the date of supply for value-added tax (VAT) with regard to independent directors' services is determined either in accordance with the general rules or the special rules, depending mainly on whether the fees for the said directors were known from the outset or not. Read more...

Profit margin scheme applies only to goods already subjected to VAT: FTA

The Federal Tax Authority (FTA) has reaffirmed on Monday that the profit margin scheme - which allows a taxable person to calculate value added tax on eligible supplies on the basis of the profit margin earned instead of the original selling price - cannot be used in cases where VAT was not earlier charged.

Such instances include if the goods were purchased by the taxable person prior to the implementation of VAT, or if stock in hand was also acquired prior to January 1 2018, the FTA clarified. Read more...

Excise FAQ's

What is tax?

It is a monetary contribution imposed by a government on individuals and organizations to raise revenue to pay for public services.

What is Excise Tax?

It is a tax on specified goods that are intended for consumption in the UAE. Tax is due when goods enter free circulation in the UAE. It is not a transaction-based tax, which means that goods do not need to be sold for the tax to be due.

What is the effective date of Excise Tax in the UAE?

Federal Decree-Law No. (7) of 2017 on Excise Tax was issued on 17th August, 2017 and is effective from 1st October, 2017.

Which goods are subject to excise tax in the UAE?

  • Carbonated drinks – 50%
  • Energy drinks – 100%
  • Tobacco – 100%

On which value will excise tax apply to?

Excise tax will be applied to the retail selling price of specified goods at the applicable rates.

What are the details of retail selling price issued?

You can find a list here.

Who is required to register for excise tax?

Producers, Importers, Stock pilers and Warehouse keepers of Excisable goods.

What should businesses required to pay excise tax do?

Register with the FTA, submit monthly excise tax returns and pay the excise tax due on the same date as submitting the tax return.

When is excise tax due?

Excise tax is due when goods enter free circulation in the UAE.

Will excise tax be payable by travellers entering the UAE?

Travellers will not need to pay excise tax on goods if the value of goods is below the Custom Duty exemption threshold. Where the value of excise goods exceeds the exemption threshold, then excise tax will be due on the total value of goods.

Will refunds of excise tax be available?

Excise tax is paid once in the supply chain and a refund will be available under limited circumstances.

Can payment of excise tax be delayed until the goods are sold?

Since excise is due at the point the goods are released for consumption in the UAE, payment of excise tax cannot be delayed till goods are sold.

Will excise tax apply to goods released for consumption in a free-zone?

Yes, including a free-zone that is registered as a designated zone.

Will samples be subject to excise tax?

Regardless of whether or not they are intended for sale, excisable goods will be subject to excise tax.

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