Will VAT affect my business? Most probably.
VAT, as a general consumption tax, will apply to the majority of transactions in goods and services. A limited number of reliefs may be granted.
A business must register for VAT if their taxable supplies and imports exceed the mandatory registration threshold of AED 375,000.
Furthermore, a business may choose to register for VAT voluntarily if their supplies and imports are less than the mandatory registration threshold, but exceed the voluntary registration threshold of AED 187,500.
What are the VAT-related responsibilities of businesses?
Businesses that meet the minimum annual turnover requirement (as evidenced by their financial records) will be required to register for VAT.
Registered businesses and traders will charge VAT to all supplies of goods and services and deemed supplies all of their customers at the prevailing rate and incur VAT on goods / services that they buy from suppliers. The difference between these sums is reclaimed or paid to the government.
All businesses in the UAE will need to record their financial transactions and ensure that their financial records are accurate and up to date.