VAT implementation does seem to have been shrouded in mystery and confusion, there are still many unanswered questions, but clarity is forming and the one thing that is for sure, VAT in the UAE goes live on 1st January 2018. All the unanswered questions will slowly be demystified as the months go by.
Time is ticking by, the deadline for VAT registration in the UAE is 4th December 2017 – so have you registered?
Hopefully you are not one of the many that have not registered in the hope that the implementation would be delayed. If you are, time to get your head out of the sand and get registered by the deadline or face a fine.
For those of you who have yet to register, let me help with a simple overview of the VAT registration requirements for those that have yet to go through the process.
- In the past 12 months and / or in the next 12 months have you / will you reach a turnover of AED375,000? If the answer is yes, then you need to register by 4th December 2017
- If the answer is no to the above question, ask yourself if in the next 12 months will you reach a turnover of between AED187,500 and AED374,999? If the answer is yes, then you can voluntarily register. If you decide not to, then keep an eye on your financial forecasting to project when you believe you will hit an annual turnover of AED375,000 so that you register in time.
- If you plan to register yourself (there are Companies that will do this for you) then the first 2 things you need to do are:
- Go to https://www.tax.gov.ae/registering-for-vat.aspx and register your Company email address
- Get your Company Name and Owner Name translated into Arabic onto a word document, as you need this for the registration screens
- Collate into a file all the documents you need to have to hand to attach to the registration screens (Trade license, Certificate of incorporation, Emirates ID, Articles of Association, bank account details, description of business activities, last 12 months turnover, projected future turnover, expected values of imports and exports, expecting any GCC supplies, details of Customs Authority Registration)
- Once you have everything ready, your good to go
Once registered, the next steps are renewing your contracts/proposal templates to include VAT charges, adapting your invoicing system, keeping clear and easily understood accounts and expenses and then the next hurdle of completing the first VAT return at the end of Q1. Easy!
It’ s always the way isn’t it … when we are not confident with something or it doesn’t fall within our wheel house of talents, then human nature kicks in and we tend to ignore the problem in the hope that it will go away.
As business owners, financials, P&L, forecasting, Income Statements, Balance Sheets can sound like a foreign language only understood by Accountants. However, as the owner of a Business you do need to have a good understanding of these areas or how else can you confidently make business decisions?
However, by not being able to get your hands on immediately easy to understand information, we tend to head back into the business and hope things like VAT go away or are delayed enough that by the time we have the time to go through it, everything has been made simple and easy.
Business owners need to have basic business acumen to be able to understand the top line information and not get caught up with the last-minute panic. Anyone who does their Christmas Shopping on 24th December knows that sometimes at the last minute, we make silly choices which we then have to live with.
Understanding your finances does not need to be complicated. You can (and should) outsource your accountancy function or employ an Accountant on your team, however, outsourcing and delegating within the team does not allow for abdication, you need to understand enough to know what you are reading and understand the financial health of your Company.
I hope these pointers helped with the VAT demystification.