VAT Services in Dubai | First Idea Consultant

VAT AND TAXATION IN THE UAE

What is the first thing that comes into your mind when you hear the term "why start your business in the UAE?" No taxes! Do you agree?

UAE is a country where businesses do not have to pay a large share of their income in taxes. This has always been a major attraction for foreign investors to start their companies in the country.

Individuals are not subject to income tax in the UAE. However, it imposes corporate taxes on foreign banks and energy firms. So, VAT is a tax included at every stage of the production and delivery of the product where the company has contributed value.

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Who is Exempted from VAT?

Understanding VAT exemptions in the UAE

Financial Services

Most financial services are free from VAT. This can involve currency exchange, extending credit or loans, or opening business or personal accounts.

Real Estate

Residential properties are exempt from VAT excluding mobile homes, and RVs. Whereas, hotels and motels are subject to VAT.

Transportation

Furthermore, any local transportation by land, water, or air is considered an exemption.

Important Note

Understanding VAT exemptions is crucial for your business compliance. Our team can help you determine if your business qualifies for any VAT exemptions and guide you through the necessary documentation.

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Is your Business Eligible to Pay VAT?

Understanding VAT requirements for businesses in the UAE

VAT of 5% equally applies to businesses conducting operations on the mainland or free zones in the UAE. Typically, VAT-registered businesses:

Keep a variety of business records that will enable the government to verify that they are doing things correctly. They must charge VAT on taxable goods or services they supply.
They may be eligible to refund any VAT they have paid on company-related items or services.
Businesses that have registered for VAT are required to regularly report to the government the amount of VAT they have collected and levied.

Record Keeping

Maintain detailed records of all transactions, invoices, and VAT calculations to ensure compliance with UAE tax regulations.

Regular Reporting

Submit periodic VAT returns and maintain transparent communication with tax authorities regarding your VAT obligations.

Need Help with VAT Registration?

Our expert team can guide you through the VAT registration process and help ensure your business remains compliant with UAE tax regulations.

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Criteria for VAT

Understanding VAT eligibility criteria in the UAE

01

Mandatory Registration

If a company's annual taxable imports and supplies total more than AED 375,000 in a year, it must register for VAT. For companies with annual supplies and imports of more than AED 187,500, it is optional.

02

VAT Payment Process

A company pays the government the tax it receives from its clients. The government also reimburses it for the tax it paid to its suppliers at the same time. Additionally, foreign companies can get their VAT back when they travel to the UAE.

VAT for Free Zone Companies

When you start a business setup in Dubai free zone, the VAT taxations are a little different with their own set of laws, these are:

If you are dealing inside a designated free zone, then your company is exempted from paying VAT.
Secondly, if you sell your products and services inside the UAE then your free zone company has to charge VAT.
Thirdly, if your company in the free zone deals with exporting outside of the UAE, then there is no VAT applicable.

Need Help Understanding VAT Criteria?

Our expert team can help you determine your VAT obligations and guide you through the registration process, whether you're in the mainland or a free zone.