A value-added tax (VAT) is a consumption tax placed on a product whenever a value is added at each stage of the supply chain, from production to the point of sale. The amount of VAT that the user pays is on the cost of the product, less any of the costs of materials used in the product that has already been taxed.

VAT is introduced in UAE from 1st January 2018 under federal law No. 8 of 2017 on Value-added Tax. The Rate of Tax is 5%.

A business must register for VAT if its taxable supplies and imports exceed AED 375,000 per annum. It is optional for businesses whose supplies and imports exceed AED 187,500 per annum.

A business must register if:

  • The total value of their taxable supplies made within the UAE exceeds the mandatory registration threshold over the previous 12 month period, or
  • They anticipate making taxable supplies with a value exceeding the mandatory registration threshold in the next 30 days.
  • The mandatory registration threshold will be AED 375,000.

Special Tax treatments are to comply with respect to a transaction which is being done in connection with a designated zone which is announced by FTA. List of designated zones are as follows:

  • Dubai: Jebel Ali Free Zone (North-South), Dubai Cars and Automotive Zone (DUCAMZ), Dubai Textile City, Free Zone Area in Al Qouz, Free Zone Area in Al Qusais, Dubai Aviation City, Dubai Airport Free Zone.
  • Abu Dhabi: Free Trade Zone of Khalifa Port, Abu Dhabi Airport Free Zone, Khalifa Industrial Zone
  • Sharjah: Hamriyah Free Zone, Sharjah Airport International Free Zone
  • Ajman: Ajman Free Zone, Umm Al Quwain Free Trade Zone in Ahmed Bin Rashid Port, Umm Al Quwain Free Trade Zone on Shaikh Mohammad Bin Zayed Road
  • Ras Al Khaimah: RAK Free Trade Zone, RAK Maritime City Free Zone, RAK Airport Free Zone
  • Fujairah: RAK Free Trade Zone, RAK Maritime City Free Zone, RAK Airport Free Zone

Annual Audit is required in the various free zone across UAE in different emirates viz. DWC, DMCC, SAIF etc. Annual Audit is a mandatory requirement by free zone authority in order to renew trade license. Most of the times these requirements are clearly set out in a memorandum of association and other legal documents’ accompanying trade license, but usually missed out due to lack of proper review.

Bookkeeping is a process of recording day to day transactions systematically in order to provide up to date financial results to its users. Management information system usually called MIS is the end result of
Bookkeeping whereby transactional data is organized viz Profit & loss account, balance sheet and cash flow to submit to the management in order to have accurate decision making.

Various formalities are required when going in to start a business. Extensive communication is required with concerned authorities to fulfill their requirements. We are capable to provide such services to our clients enabling them to easily enter into a venture.