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VAT & Excise Tax

Comprehensive VAT & Excise Tax Services with DDP

Navigating the complex landscape of VAT and Excise Tax compliance in the UAE can be challenging. At DDP, we offer a comprehensive range of services to ensure your business is fully compliant with all regulatory requirements, while optimizing your tax strategy. We cover every aspect of VAT and Excise Tax compliance, including registration, filing, exemption management, and advisory services, ensuring that your business can focus on growth while we manage the taxes.

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Tax services

VAT Services

Value Added Tax (VAT) is a consumption tax applied to most goods and services in the UAE. While the general rate is 5%, certain goods and services are either exempt or zero-rated. Businesses with an annual turnover exceeding AED 375,000 must register for VAT, and even those below this threshold can voluntarily register.

VAT Registration Process

To register for VAT in the UAE, businesses must follow a structured process:

Evaluate VAT Obligations:

  • Determine whether your business exceeds the mandatory threshold of AED 375,000 annual turnover.
  • Businesses with turnover between AED 187,500 and AED 375,000 may voluntarily register for VAT.

Prepare Required Documentation:

  • Trade license
  • Passport and Emirates ID copies of the business owner(s)
  • Business contact details (address, phone, email)
  • Estimated annual turnover and expected taxable supplies
  • Bank account details

Online Registration:

  • Submit the VAT registration application through the Federal Tax Authority (FTA) portal.
  • Include business activities, imports/exports data, and expected turnover.
  • FTA will review and issue a Tax Registration Number (TRN) upon approval.

Post-Registration:

  • Display your TRN on all invoices and official documents.
  • Update your accounting software to handle VAT-compliant invoicing and returns.

Key Aspects of VAT

Standard Rate (5%):

Applies to most goods and services in the UAE.

● Zero-Rated Supplies: Goods and services subject to a 0% VAT, such as:

  • Export of goods/services outside the UAE.
  • International transportation.
  • Certain healthcare and educational services.

● Exempt Supplies: These are not subject to VAT, and businesses cannot recover VAT on expenses related to these supplies:

  • Residential properties.
  • Financial services (in specific conditions).
  • Local passenger transport.
tax 5

VAT Filing and Compliance

VAT Filing and Compliance

Once registered, businesses must file VAT returns periodically (usually quarterly). The VAT return summarizes the VAT collected on sales and VAT paid on purchases. Non-compliance can lead to penalties, so accurate and timely filing is crucial.

● VAT Return Filing: Goods and services subject to a 0% VAT, such as:
  • VAT returns are filed online via the FTA portal.
  • All taxable sales, purchases, and VAT payments are reported.
  • Net VAT liability (VAT payable or refundable) is calculated.
● VAT Refunds:
  • If input tax (VAT paid on purchases) exceeds output tax (VAT collected on sales), the business may be eligible for a refund.

VAT Deregistration

Businesses must deregister for VAT if:

  • The annual turnover falls below AED 187,500.
  • They cease trading or no longer make taxable supplies.
  • Deregistration is done via the FTA portal, with penalties for late deregistration.

Excise Tax Services

Excise Tax is levied on specific goods that are harmful to human health or the environment. It applies to businesses involved in the manufacture, import, or distribution of excise goods, which include:

● 50% tax on carbonated drinks.

● 100% tax on energy drinks, tobacco, and electronic smoking devices.

● 100% on sweetened drinks (sugar-added beverages).

Excise Tax Registration Process

Excise tax registration is mandatory for any business dealing with excise goods. The registration process involves the following steps:

Prepare Required Documents:

  • Business license and activity information.
  • Details of excise goods to be manufactured, imported, or sold.
  • Warehouse registration for excise goods (if applicable).

Online Registration with FTA:

  • Submit the excise tax registration form through the FTA portal.
  • Provide details of the excise goods involved in your business.
  • If you have a warehouse for excise goods, it must also be registered and approved by the FTA.

FTA Review and Approval:

  • Once submitted, the FTA reviews the application. Upon approval, businesses receive their Excise Tax Registration Number.

Post-Registration:

  • Ensure excise tax is added to the price of applicable goods.
  • Maintain proper records of excise goods produced, imported, or sold.

Key Aspects of Excise Tax

  • Goods Subject to Excise Tax:
    • Carbonated drinks.
    • Energy drinks.
    • Tobacco products (including electronic smoking devices).
    • Sweetened beverages.
  • Exemptions:
    • Some items, like medicinal products and specific international supplies, may be exempt.
    • Items in free zones or transit that do not enter local consumption markets are also exempt.

Excise Tax Filing and Compliance

  • Excise Tax Filing:
    • Monthly or quarterly excise tax returns must be filed via the FTA portal.
    • Report the quantity of excise goods produced, imported, or sold.
    • Pay the excise tax due for the period.
  • Excise Declarations:
    • Before manufacturing or importing excise goods, businesses must declare these to the FTA and account for the excise tax liability.

Penalties for VAT & Excise Tax Non-Compliance

Failure to comply with VAT or Excise Tax regulations can result in penalties from the FTA. These penalties can be significant and can negatively affect your business. Here are the common penalties:

VAT Penalties:

  • Late VAT Return Filing: AED 1,000 for the first violation, AED 2,000 for subsequent violations within 24 months.
  • Failure to Register for VAT: AED 20,000.
  • Incorrect VAT Filing: The penalty can start at 2% of the unpaid tax and go up to 300%, depending on the duration of non-payment.
  • Failure to Deregister: AED 10,000.

Excise Tax Penalties:

  • Failure to Register for Excise Tax: AED 20,000.
  • Late Filing of Excise Tax: AED 1,000 for the first offense, AED 2,000 for repeated offenses within two years.
  • Incorrect Tax Declaration: Penalties can range from 2% of unpaid tax (if rectified within 30 days) to 300% for continued non-compliance.

Why Choose DDP for VAT & Excise Tax Services?

At DDP, we offer end-to-end solutions for VAT and Excise Tax compliance, ensuring that your business is always compliant with the latest regulations. Our services include:

  • Registration & Deregistration: Assistance with VAT and Excise Tax registration or deregistration, ensuring compliance with FTA deadlines.
  • Tax Filing & Reporting: Timely and accurate filing of VAT and Excise Tax returns to avoid penalties.
  • Tax Advisory: Strategic advice to help minimize your tax burden and navigate complex tax laws.
  • Penalty Prevention: Regular compliance checks to avoid costly penalties and fines.
  • FTA Audit Support: Representation and support during FTA audits to ensure smooth processes and issue resolution.
Tax & Excise

DDP: Your Trusted Partner for VAT & Excise Tax

With DDP, you can rely on our expert team to handle all aspects of VAT and Excise Tax compliance. We ensure your business operates smoothly without the worry of fines, penalties, or non-compliance. By partnering with us, you focus on growth while we manage your tax obligations

Let us help you navigate the complexities of VAT and Excise Tax—Contact DDP today to learn more!

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