UAE VAT IN A SNAPSHOT
Legal Framework Understanding VAT Model VAT Impact in UAE A Quick Guide to VAT Registration Ongoing Contratce with Registered Persons Tax Group Registration Rates and Input Credit Mechanism What is Supply? Intra GCC Transactions VAT Periodical Compliance Transition VAT Impact Areas VAT Implementation Roadmap GST Implementation Success Story (In India) VAT Advisory
Legal Framework for VAT in UAE GCC AGREEMENT (finalized and published) VAT LAW (final law published) VAT IMPLEMENTATION REGULATIONS (Draft Law Available in Public Domain) TAX RULINGS (as and when required) Sets broad principles and some mandatory elements for VAT in GCC Each state responsible for its own implementation and enforcement Federal Decree - Law No (8) of 2017 passed which gives effect to GCC agreement Sets out implementation and compliance enforcement framework for VAT Expected to be Launched Soon.
Value Added Tax (VAT) Model Manufacturer (AED 10000 + VAT 500) AED 500 AED (12100+605) Consumer (Landed Cost AED 12705) Distributor (AED 11000 + VAT 550) AED 50 (550-500) AED 55 (605 550) Retailer (AED 12100 + VAT 605)
VAT Impact in UAE Sales Price VAT @ 5% VAT Credit Tax to the Government Manufacturer to Net Taxable Price 10000.00 500.00 500.00 Distributor Distributor to Net Taxable Price 110% 11000.00 550.00 500.00 50.00 Retailer Retailer to Net Taxable Price 110% 12100.00 605.00 550.00 55.00 Consumer Dealer Total 1655.00 1050.00 605.00
Registration Mandatory Article 13 Registration by Exception Article 15 Voluntary Article 17 Person has residence in State/ Implementing State a) Total Value of All supplies exceed the Mandatory Threshold (AED 375000) b) Anticipated that above Threshold will exceed in next 30 Days Person does not have a place of residence If he makes A) Supplies of goods or services and B) No other person is obligated to pay the due tax on these supplies No threshold limit a) Total Value of All supplies Received in Article (19) exceeds the Mandatory Threshold (AED 187500) b) Value of Supplies not exceeded but expenses incurred exceeded voluntary threshold limit Threshold limit for mandatory registration as per article 50/51 of GCC Agreement
Tax Group Registration (Article 79 of the VAT Regulation ) Holding Company Eligible for Group Registration 51 : 49 Hospitality 65:35 Real Estate Business 35:65 School Not Eligible for Group Registration More than 50% ownership or control is the criteria Atleast one person in the group is taxable Once tax group is approved,all individual entity licensed stand cancelled. The Applying entity shall become the primary member responsible for compliance of the entire tax group
5% Input Tax Deductible Rates and Input Credit Mechanism Standard Rate Out of Scope (Entities + Type of Transactions + Supplies) Supply of goods or services, other than those to be specified in the VAT Executive Regulations Supply of goods made outside the UAE region; Supplies made by a person who does not belong to and is located outside the UAE region and falls outside the scope of imported services; Business below the threshold limit; Supply within or between Designated Zones under Article 51; Government supply except as envisaged under law; and Purchases made from unregistered businesses and private individuals. These purchases do not appear at all on the VAT Return, as they fall completely outside the VAT system. Exempt Non Deductible Finance Services including Life Insurance (Article 46) Lease or license of Residential Real Estate (Article 30) Supply of bare land Supply of land passenger transport 0% Input Tax Deductible Exports of Goods from UAE (Article 32) Transportation services for Goods or passengers outside the Kingdom and Supplies relating to transportation (Article 34) Medicines and medical equipment (Article 35) Supply & Import of Goods & Service (Article 44) Education (Article 44)
What is Supply? Deemed Supply Supply of Services Article 6 Supply Exempt Supply Supply of Goods Article 5 Transfer of Ownership Transfer of right to use Deferred transfer of ownership
Supply is a Wide Term Of Goods (article 5) Deemed Supply (article 11) Of Services (article 6) To Govt. Entities (article 10) Supply Includes Special Cases (article 7) Via Agent (article 9) Of More than one components (article 8)
Intra-GCC Transaction World Including Non Implementing states of GCC region UAE Local Sale UAE VAT Implementing States GCC Region KSA Unregistered Suppliers Suppliers Local Purchase Branch Transfer No Tax Intra GCC sale UAE VAT UAE VAT payable by Importer Intra GCC sale Registered Dealer UAE VAT Import Purchase UAE VAT payable by Importer Zero Rated Export Sale You UAE VAT payable by Importer Intra GCC purchase Suppliers
VAT Periodical Compliance No such express frequency is given as on today only tax period is defined. (It may be monthly, quarterly, annually or any other period specified as per Article 71.)
Transition Invoice Issued Money Recieved VAT Implemented Goods Supplied 25 th Dec 28 th Dec 1 st Jan 10 th Jan A fresh Invoice showing VAT to be issued seperately if tax is not already included in the same. There shall be a VAT applicable even on the contracts signed before envisage VAT Implementation
VAT Impact Areas Supply Chain Tax & Finance Assess costing Re-design processes Sales & Marketing Collect customer vat data Restructure at existing contracts Human Capital Re-skill / recruit / outsource Assess and change the division of Responsibility with respect to vat IT Systems complete registration formalities Plan for transition to new law Plan for the change in cashflow Design compliance calendars Add relevant tax clauses in relevant agreements Validate critical documentation and formats Update vat data in vendor/ customer Masters Update inventory masters with Tax class and rates Develop document formats for Invoices / debit note / credit notes Design relevant statutory Reports for vat filing and record Keeping
Roadmap for VAT Implementation UAE VAT Preparedness Activity PHASE-1 Impact Analysis As is Study Suggesting Tax Optimization Scenarios Drawing Change Management Roadmap PHASE-2 Implementation Registrations Policy and SOPs Team Training System Integration support PHASE-3 Post Implementation Support Day to day queries Handholding team through 3 monthly cycles of VAT filing from an offshore basis Key Outcome Impact in costing / pricing / cashflow due to VAT Objective decision making for optimizing the tax impact Approved implementation roadmap Clear operating guideline Team sensitization ERP requirement mapping ERP User Acceptance Testing (UAT) Compliance Assurance Online issue resolution System related feedback generation Impact Analysis Implementation Post Implementation support Nov. 2017 Dec. 2017 1 st Jan. 2018 Feb., Mar., April 2018
GST Implementation Success Story (in India) Multi-Nationals Trading and Distribution Manufacturing and Ancillaries VC / PE Funded Banking Logistics Construction and Real-estate Family Owned SAAS Engineering Hospitality Broking e-commerce Startups Small and Medium Large
CA Mitesh Katira Partner APMH Profile Brief Mitesh is a Chartered Accountant and a ISA qualified with specialisation lies in Business Advisory Services with more than 15 years of experience. Mitesh has been focusing on Internal Compliance Outsourcing and Audits, GST implementation. He has been helping corporate and Multinationals on GST Impact Analysis, Implementation and Compliance. Mitesh has been convenor for Information Technology Committee of the CTC i.e., Chamber of Tax Consultants. He is also a part of IT committee of the WIRC of ICAI. Mitesh has also been a Convenor of the Ghatkopar C A CPE Study Circle. Specializations VAT Implementation VAT Transaction advisory VAT compliance outsourcing Corporate Training Process Implementation Education and Certifications Chartered Accountant DISA - ICAI FAFP ICAI Certified trainer india GST by ICAI CA Pranav Kapadia Partner APMH Profile Brief Pranav s expertise lies in GST Consulting,GST Advance Ruling, GST Transaction Advisory and GST Classification Consulting. He has been an expert consultant to large corporates with presence in Multiple States with complex structures in the Indirect Tax. Pranav lucidly deals in complex legal matters like Works Contracts (WCT), DDQ (Determination Disputed Question) now called Advance Ruling (AR), Assessments and Appeals related to VAT and Allied Tax Laws. Pranav is also an expert consultant on VAT for Corporates and Multinationals in GCC region, mainly Saudi Arabia and UAE. He is the President of The Goods & Service Tax Practitioners Association (GSTPAM) of Maharashtra. Pranav is also part of the Indirect Tax Research Committee of the WIRC of ICAI. He has been past Chairman of Indirect Tax Committee of The Chamber of Tax Consultants for 2014-15 and past Convenor of Ghatkopar CPE Study Circle of ICAI. Pranav has addressed various seminars and lectures on MVAT and CST & GST at the GSTPAM, Chamber of Tax Consultants, WIRC Study Circles of ICAI and various Industrial Associations in Mumbai and across Maharashtra. Specializations VAT Advisory VAT Opinion VAT Advance Ruling Education Chartered Accountant DISA - ICAI
CA Atul Mehta Senior Partner Profile Brief Atul focuses on accounting and taxation practice of the firm. He has exposure of more than 17 years in accounts outsourcing and tax advisory side with a specialization in GST Compliance His expertise lies in consultancy, opinions and Tax Planning for Corporates and Individuals. Atul can lucidly handle complex audits, advisory and assessment matters issues related Works Contract matters, CENVAT Credit Rules, Point of Taxation (POT) Rules, Point of Provision of Services (POPS) Rule and so on. Currently Atul is a Convenor for Indirect Taxation Committee of the Chamber of Tax Consultants. He has led the Ghatkopar CA CPE Study Circle of WIRC. Atul has Conducted Training Session organized by WIRC-ICAI and has served at WIRC ICAI Committee for Research and Development and Direct Tax Committee. Atul is appointed as the Vice Chairman of CTC IDT Committe of India. Specializations VAT Compliance Education Chartered Accountant DISA - ICAI CA Amlesh Gupta Manager APMH Profile Brief CA Amlesh Gupta is a Chartered Accountant by profession with more than 5 yrs of experience in Tax Advisory services mainly consisting of GST Implementation and Enterprise Compliance India VAT, Service Tax, Withholding tax and GST Compliance. Amlesh has been handholding India GST Impact Analysis and GST Implementation for various service industries while India went live with GST on 1st July 2017. Apart from domain knowledge, Amlesh has brief understanding of IT Systems,Project Management and Training Skills. Amlesh has been understanding, learning and tracking development in VAT Laws and Regulations in Saudi Arabia and other GCC Countries. Specializations Tax Advisory VAT Compliances & Consulting GST Implementation, Compliance and Consulting Tax Technology Education B.Com Chartered Accountant
Mehul Pawani Senior IT Consultant APMH Profile Brief Mehul is an IT enthusiast with deep understanding about functional aspects of software applications computer systems, networking along with background of accounting and finance. Mehul has been attending various workshops and trainings on data analytics, excel, ethical hacking, cyber forensic, excel and so on. With his ability to understand IT and money trails ie, accounting quickly. Mehul is an expert in systems audit, vulnerability testing, application implementation, etc. Mehul has been important part of IT team of APMH for more than 3 years. Specializations VAT IT Implementation Process Consultant
Get in Touch Mumbai : D-613/614, Neelkanth Business Park, Opp. Near Railway Station,Vidyavihar(W), Mumbai - 400 086. +91-22-2514-6854 / 55 / 56 / 57 / 58 info@apmh.in www.apmh.in Disclaimer: Content published in this book is based on the VAT Acts, Rules and notifications from other sources believed to be reliable, but no representation or warranty is made to its accuracy, completeness or correctness. This is to simplify the legal provisions and procedural aspects of of the law keeping in mind a basic businessman and their accounting team, with the helps of simpler language and graphical representation and so may result into error or omission or interpretation differences. This document is not intended to be a substitute for professional, technical or legal advice or opinion and the contents in this document are subject to change without notice. Whilst due care has been taken in the preparation of this presentation and information contained herein, APMH, accept any liability whatsoever, for any direct or consequential loss howsoever arising from any use of this document or its contents or otherwise arising in connection herewith. Date of Designing : 27/10/2017