VAT stands for Value-Added Tax; it is commonly referred to as a consumption tax. At each stage of the supply chain, a value is added to a product or a service. While the amount of VAT depends on the product’s cost, it also depends on the intermediate stages, from the point of production to the sale point.
VAT income of the seller is based on the consumption by the taxpayers. As opposed to progressive income tax, which is imposed based on how much more a person earns, the VAT tax applies equally to every purchase.
Tax invoice of VAT in UAE
As compared to simplified tax, tax invoices requires more detail for recording. Issuing tax invoices are a must for registered sellers in UAE for VAT.
Detailed VAT invoices contain the following details:
- Name, address & TRN of customer and supplier
- “Tax Invoice” mentioned in a noticeable location on the receipt
- Supplied date
- Discount, if valid
- Due tax amount to be paid in AED
- Explanation of goods and services
- The gross value of invoices to be paid in AED
- Total chargeable amount of VAT
- Price of the unit, supplied volume or quantity, payable amount, and the amount of tax in AED
All the issued invoices must meet all of these requirements under the VAT law of UAE. If you are not successful in including all of these details, then you may face an Administrative Penalty. It is advisable to use a software that keeps on updating with all of the necessary UAE value-added tax requirements.
Regardless of the size of the business, using software for tax receipts will automatically keep track of all the required details from a tax invoice. Not only will it generate tax invoices quickly, but it also makes it easier to update the details on a tax invoice, as and when required.
It is also essential to ensure that your tax invoices are adequately issued by suppliers. Tax invoices serve as proof when a business applies for a tax deduction for these supplies. However, your business should take necessary measures to ensure that your tax invoices are complete, accurate, and issued under VAT rules.
Simplified tax invoice according to VAT in UAE
Basically, a simplified tax invoice is a simple version of tax invoices. As compared to the tax invoice, only fewer details are required to be mentioned in simplified taxes.
A registrant can issue a simplified tax invoice for supplies of taxable goods and services in the following two cases:
- If the receiver is not registered under the law of VAT, or
- If the receiver is registered under the law of VAT, and the supplies do not exceed AED 10,000.
However, simplified tax invoices are the invoices that all registered businesses in UAE should issue. Therefore, retail businesses whose supplies have a value of less than AED 10,000 can issue simplified tax invoices for all supplies of taxable goods and services. This will be sufficient for their compliance with VAT rules.
Format of simplified tax invoice
As compared to a tax invoice, the details which are necessary for a simplified tax invoice are lesser and quite straightforward. Both of these taxes are meant to be prepared with the same headings, but a simplified tax invoice does not demand the collection of the recipient’s details. A simplified tax invoice is much easy to generate and fill in
Tax invoice checklist
- Presence of tax invoice title on all of the issued invoices
- Display of tax registration number
- The price displayed should include VAT
- Amount of charged VAT
Use Xero for tax filing in UAE
Xero makes the process of financial reporting and tax filing a lot simple for its Xero partners.
Xero offers tax agent services to its clients in the UAE by helping them to fulfill the new tax provisions and by providing them proper guidance. Certified tax agents by Xero in UAE are professionals who know very well how to control and handle all tax-related matters.
Alpha Pro Partners has a diligent team of VAT specialists who are Xero specialists as well. We can assist your businesses to overcome all sorts of tax difficulties in the light of VAT rules and regulations. We can give you sufficient guidance to automate your tax and accounts with Xero.
Voluntary disclosure of VAT
It is a form that is provided by the FTA (Federal Tax Authority). Using this form, taxpayers and businesses can notify the FTA about the changes, omission, and/or mistakes in a tax refund or tax return.
In UAE, VAT voluntary disclosure is a form that assists taxable people in correcting the mistakes they have made while applying for the refund of VAT or submitting a return of VAT. It gives businesses the opportunity to voluntarily disclose those mistakes and thus avoid receiving a penalty.
De-registration of VAT in UAE
It is an online process. Those individuals and businesses who are registered under FTA (Federal Tax Authority) can de-register themselves from VAT in the following two situations:
- After registering with the FTA, if their business did not exceed AED 187,500 in 12 months – in that case, they can apply for de-registration of VAT.
- If their business stops making the supplies that are taxable, then they must apply for de-registration of VAT.
If you need any assistance regarding VAT invoices in UAE, feel free to reach out to Alpha Pro Partners. We have certified professionals who are expert in all accounting domains who can handle your VAT procedures very efficiently.
This article is written in general terms and therefore cannot be relied on to cover specific situations; application of the principles set out will depend upon the particular circumstances involved and we recommend that you obtain professional advice before acting or refraining from acting on any of its contents.