Value added tax, VAT, is the tax applied to a product or service at every stage during its manufacturing process. For example, if an object is painted on, the object is having value added to it. Similary, when various parts are put together to form a product, value is said to be added to the product.
The government of UAE introduced this regulation in the year 2018, on the 1st of January. The regulation states that any company or business setup in Dubai, that is able to accumulate over £85,000 threshold of taxable turnover, is eligible for registration of VAT in Dubai. The advantage of this policy is that when a company purchases goods and services from another company, the purchaser can reclaim the amount paid for the purchase.
Furthermore, the company or business appear larger and more appealing to customers and clients.
Business consultancies can tell you how to register company for VAT.
What is VAT De-Registration?
Through VAT De-registration a registered firm applies for cancellation of its registration. VAT De-registration is required when any taxable business does not need registration.
Whenever a business stops trading or no longer deals with taxable goods and services, it can get its VAT number cancelled.
If a you are no longer dealing with the taxable goods, you should request the tax authorities for de-registration. Also, if the value of the taxable goods and services does not exceed the given threshold, you can get de-registered.
Advantages and Disadvantages of VAT
The companies and business setup in Dubai that are registered with the Federal Tax Authority (FTA) are allowed to deregister for VAT. The company or business can deregister by issuing an application if their annual taxable turnover does not meet the required £85,000 threshold. If the company or business setup in Dubai does not expect to meet these requirements in a months’ time after the first 12 month’s, they can deregister as VAT applicants.
However, any remaining unpaid and unclear dues of the company need to be cleared off before the company can deregister itself from VAT.
The Federal Tax Authority, FTA, is also allowed to cancel applicants of VAT that are no longer eligible and do not plan on producing the required taxable turnover in the future.
Deregistering a company or business from VAT in Dubai can be beneficial for the owners. This is because the company owner’s do not have to abide by the rules of VAT. Similarly, they do not need to pay for any VAT costs. The costs of production will also decrease as VAT is no longer being added.
On the other hand, there are a few disadvantages for owner’s. For example, without registration of VAT in Dubai, the owner’s will not be able to reclaim VAT. Furthermore, the company or business will be required to pay for VAT for assets that were purchased while the company or business were still VAT registered.
Small businesses or companies can gain advantage from VAT registration. Many international companies are reluctant in working with unregistered companies. However, due the VAT requirements, the business or company appears reliable and appealing.
VAT can be costly as the owner is required to keep safe all invoices and receipts. To do the paperwork and keep accounts, accountants need to be hired. The accountants can be expensive to hire.
Moreover, the product prices seem more expensive which may be an issue especially if the company directly deals with consumers.
How we can help you.
KWS Middle East is a professional consultancy that provides assistance for new business owners in establishing their business, across UAE. The consultancy acts as advisers for the business owners and teach their clients the policies and operations of business. They also provide services that help in every step of the establishment process of the business. KWS Middle East knows how to help people register company for VAT.
Other services provided by KWS Middle East are visa and registrations, licensing, opening bank accounts etc. As the consultancy has been operating for years, they are aware of the different policies and upgradations that have been made over the past few years. Therefore, KWS Middle East is able to provide the most accurate and efficient consultation and PRO services.
The firm can also provide information on how to register company for VAT.
We provide all business solutionsnunder one roof. Call or us or send us an email.