Value added tax commonly referred to as VAT came into operation in the UAE on 1st January 2018 and it has been recognized as a major fiscal change in the country. VAT, a type of consumption tax placed on each transaction level in the supply chain, became a significant force affecting businesses in the UAE. Due to this, there is the need to access services in VAT to ensure proper compliance and-efficient operations in the business environment. This blog examines the different aspects of VAT services that can be molded to the UAE business, thus the objective of the blog is to offer a clear picture of how to navigate the VAT processes for the businesses.

•  Registration and Deregistration
  The registration for VAT is required if the supplier’s and importer’s annual turnover for standard rated and zero-rated supplies is more than AED 375000. For the amount over AED 187,500, it is based on the employee’s discretion. Requirements for registration include turnover thresholds that in proper registration businesses are able to charge vat on sales and recover vat on purchases.

Registration Process: FTA has elaborated a guide that outlines all the procedures involving VAT registration as well as all the documentation that needs to be prepared together with the turnover thresholds that needs to be observed in order to meet the registration deadline.

Deregistration: Any business, which stopped its operations or its turnover is below the threshold, required for filing the registration application, should apply for deregistration to avoid penalties. For this reason, an organization needs to know when and how deregistering should be done so that it does not derail its compliance system.

•  Record Keeping:
  Pertaining to the legalities, record keeping is mandatory, and particularly crucial for the right calculation of VAT. Organizations are required to retain all vouchers of sale and purchases, other formal documents such as invoices, receipts, and others for not less than five fiscal years.

Documentation: Invoices, credit notes, receipts as well as proofs should be in details. Documentation aids in the determination of VAT for instance through the use of accounting records and by aiding in audits.

Digital Record Keeping: The use of technology in keeping records will reduce error and can easily be accessed. Technology specifically cloud-based software can simplify it thus helping in the management of records.

•  VAT Impact Assessment:
  An awareness of how the general value added tax regulation affect different areas of a business organization is necessary for planning.

Financial Impact: Evaluating the VAT impact on cash flow and business, pricing strategies, and evaluating the profitability of a business

Operational Impact: Focusing on the changes in management that might be called for to address business areas like invoicing, procurement or sales.

• VAT Structuring:
  The insight of structuring VAT can assist the businesses to pay least VAT possible amount.

Supply Chain Optimization: Reorganizing the supply chain: information and suggestions to improve the recovery of VAT and minimize VAT expenses.

Transactional Structuring: Scheduling purchases and sales to get the best effect of using the VAT, such as ensuring that purchases are made near the start or end of a VAT period in order to minimize their effect on available cash.

• Tax Advisory Services
  Consultancies provide advisory services on a continuous basis to ensure that an organization remains in line with the legal requirements as well as runs in the most optimized method possible.

Regulatory Updates: It also refers to the need to update one with changes in the VAT legislation and the understanding implications arising therefrom.

Strategic Advice: VAT advisory, which entails offering the client a strategic approach to the VAT matters and transactions that may be involved.

• Preparation of VAT Return
  This is another very crucial factor in preparing VAT returns as a delay or inaccuracy in preparing and submitting returns may lead to penalties.

Data Collection and Analysis: In order to accurate prepare the vat returns, collect and analyze information from the business functions.

Reconciliation: Comparing the VAT returns with the financial statements so as to drawable correct conclusions thereof.

•  Automated VAT Filing
  It is also hereby acknowledged that there is an improvement in efficiency when the VAT return is filed automatically.

Software Solutions: Incorporating technology and its facets such as data capturing, data analysis and filing of VAT returns.

Integration: How to implement the VAT software in cooperation with the presently used accounting and ERP applications.

•  Managing Deadlines
  Paying the required amount of VAT and filing the returns before the due dates is highly significant to prevent punitive measures.

Calendar Management: Maintenance of the record of the due dates for filing VAT and making sure that all the filings are made on due dates.

Reminders and Alerts: Scheduling notification for some milestones which are important not to be forgotten.

• VAT Audits Planning
  As with any self-assessment, VAT audits can be quite a concerning process, with the right approach and preorganization most of the pressure can be relieved.

Internal Audits: Carrying out day to day check and balances in the organization to make the organization prepared for external audits.

Audit Trails: Providing easily retrievable documents to support all the transactions as a way of ensuring they are easily audited.

• Managing VAT Audits
  Proper handling of VAT audits will help in the reduction in the disturbances and penalties.

Communication: Becoming and staying their friends and on speaking terms with them.

Documentation: The need to ensure that every claim made on vat returns is supported by full and correct documentation.

• Post-Audit Support
  Follow-up entails that all the problems which may be identified during the audit are corrected.

Corrective Actions: The initiatives include but not limited to correcting audit findings through the execution of actions that should correct a stated concern within an organization.

Continuous Improvement: The potential for utilizing audit findings to enhance performance on the VAT aspects of business systems and controls.

•  Staff Training Programs
  When it comes to VAT it is therefore necessary that staff is trained on the subject, so that it complies and operates efficiently.

Customized Training: Such programs include the identification of training needs and the design of training plans that will meet the needs of the business.

Regular Updates: Organizing awareness sessions to update the staff on changes in the aspects of VAT from time to time.

• Workshops and Seminars
  Academic workshops and seminars can give detailed theoretical and practical information.

Industry-Specific Workshops: Arranging conferences that may be dedicated to particular types of VAT problems concerning specific sectors.

Practical Sessions: Practical sessions such as assumption of real life VAT cases.

• Online Learning Resources
  Teaching aids provided on the internet are more pliable and easier to access, when it comes to continuous titbits of VAT knowledge.

E-Learning Modules: Creating records, which are also online courses that the staff can take at their own convenience.

Webinars: Organizing webinars on different matters related to VAT in order to provide a chance to learn for the staff.

•  VAT Software Solutions
  The adoption of VAT software solutions can effectively improve the VAT business operations.

Automation: Calculating VAT, preparing, and filing returns through the help of accountancy software.

Integration: Britain adopting Value Added Tax (VAT) and the subsequent implementation of the proper VAT software that can easily integrate with the business systems.

•  Data Analytics
  Applying data analysis to the performance of VAT and understanding the need for improvement is important.

VAT Analytics: Using big data analytics techniques to explore VAT data in order to find out its most popular patterns, deviations from standard behavior, and ways for its further enhancement.

Reporting: Incorporating detailed reports that are useful in analyzing the performance and the compliance to VAT laws.

• Blockchain Technology
  In light of the discussion above, a number of advantages within the framework of the application of blockchain technology for the management of VAT can be highlighted.

Transparency and Security: The following is the general fact about vat: Promoting transparency and security in vat transactions.

Smart Contracts: An application of smart contracts to self-executing compliance in VAT and minimization of chances of error occurrence.

Optimizing the VAT services offered to UAE businesses therefore require a conclusions and plans, return filing, audit management, training, and IT consultancy. The following is a breakdown of the various services and how by adopting them, companies can achieve compliance, reduced VAT charges, and efficiency. Prioritizing awareness and understanding of changes in regulations and enhancing the use of technology in managing VAT regime are crucial to optimally operate the organization’s VAT processes.

Here at CBM Consultants, we ensure that your business will reach new heights because you’ll be making the important decisions while our team of experts help you by doing the mundane tasks of taxes & legalities. For more information, contact us at cbmc.ae.