The proposed implementation date is currently 1 January 2018. This is the date from which all registered businesses must charge VAT on their invoices.
The UAE and KSA are on schedule to meet this implementation date; however, for GCC members that are unable to keep this date, the GCC Unified Agreement on VAT (UAVAT) mandates that all members should have implemented VAT by 1 January 2019.
There are currently two rates of VAT:
- Standard Rate of 5%, and
- Zero Rate (0%)
There are two further categories of VAT:
- Exempt, and
- Outside the Scope of VAT
Registration is expected to begin on 1 October 2017.
Registration will be done online through the FTA portal.
The mandatory registration threshold has been set at AED 375,000 of annual taxable sales. All businesses with sales greater than this threshold will be required to register.
Businesses with sales greater than AED 187,500 but less than AED 375,000 of annual taxable sales will be allowed voluntary registration.
The standard VAT returns will need to be filed quarterly. The relevant quarters for each business will be advised by the FTA. Some businesses will be able to qualify for annual filing.
The return must be filed electronically with the FTA within 30 days of the quarter end.
Any VAT due will have to be paid with the VAT return within 30 days of the relevant quarter end. Some businesses that meet certain conditions will be required to pay VAT on a monthly basis.
The FTA will administer VAT on the basis of the VAT Law. As such any violation of the law will involve penalties and fines. Their size and nature will be dependent on whether the violation is considered deliberate or accidental.
Follow all requirements of the law, either by learning the law or by hiring a specialist to advise and assist with VAT.
The cause of the penalty will need to be determined, and where possible, it should be disputed. VatMan Gulf can handle this entire process on your behalf and close the matter with the FTA.
The same would apply for any assessments received from the FTA.