SIMPLY PUT

Q: Who can or will be able to register for VAT? A: A business must register for VAT if their taxable supplies and imports exceed the mandatory registration threshold of Dh375,000. 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 Dh187,500.

Similarly, a business may register voluntarily if their expenses exceed the voluntary registration threshold. This latter opportunity to register voluntarily is designed to enable start-up businesses with no turnover to register for VAT. Q: How long must a taxable person retain VAT invoices for? A: Any taxable person must retain VAT invoices issued and received for a minimum of five years. Q: Can businesses offset customs duty against VAT payments? A: VAT shall be payable in addition to the custom duties paid by the importer of the goods and cannot be deducted. VAT shall be computed on the value that includes the customs duties. Q: Will there be VAT grouping? A: Businesses that satisfy certain requirements covered under the legislation (such as being resident in the UAE and being related/associated parties) will be able to register as a VAT group. For some businesses, VAT grouping will be a useful tool that would simplify accounting for VAT. Q: Will there be bad debt relief ? A: VAT registered businesses will be able to reduce their output tax liability by the amount of VAT that relates to bad debt which has been written off by the VAT registered business. The legislation will include the conditions and limitations concerning the use of this relief.