VAT in UAE
VAT is form indirect taxation that is charged at every stage of ‘Value Addition’ in the supply and distribution chain and the mechanism of Input tax deduction ensures that the businesses act as tax agents or tax collectors of the government, who collect the tax from the end consumers, account and pay the tax. Ultimately, the end consumer pays the tax. What is a TRN Number is explained below.
The advent of Value Added Tax (VAT) regime in the UAE marks the beginning of a new era in the history of the UAE economy where the general public will start aiding the government by paying tax.
Why VAT in UAE?
GCC countries have decided to implement taxation as part of the governments’ efforts to diversify revenues in the context of sharp decline in oil prices. The introduction of VAT will help the UAE government to generate an estimated Dh12 billion worth of revenue in the first year, which will increase to Dh20 billion in 2019.Collection of VAT will boost government revenues.
A standard rate of 5% will be levied on the supply of goods and services in UAE. However, there are certain supplies such as local passenger transportation, specified financial services, healthcare, exports outside GCC and so on, which will be either zero-rated or exempted from VAT in UAE.
Who should register under VAT – What is a TRN Number?
A business should register for VAT if their taxable supplies and imports exceed the mandatory registration threshold of 375,000 AED.
A business can also choose to register for VAT voluntarily under two conditions:
- If the supplies and imports of the business are less than the mandatory registration threshold, but greater than the voluntary registration threshold of AED 187,500.
- If expenses of the business exceed the voluntary registration threshold. This opportunity is designed to enable start-up businesses with no turnover to register for VAT.
Procedure to register for VAT– What is a TRN Number?
The online VAT registration process will be carried out at the official portal of the Ministry of Finance. The procedure in sequence as given below:
Steps for UAE VAT Registration Process:
- Go to FTA Online Portal. https://eservices.tax.gov.ae/en-us/
- Click the option for VAT certificate to reach a new page.
- Follow the option of ‘Start Service’ by clicking it.
- Complete the registration process and create your unique login id and password.
- As you succeed with the userid and password creation, you can now login and reach the customer landing page.
- Click the option for ‘Create a new tax request’.
- Fill up all the required details at the next step.
- After submitting the details, you will be directed to the payment gateway.
- You may pay the online fees for VAT registration procedure in Dubai using e-Dirham G2 cards, non-dirham cards, and e-wallet.
- On successful submission, Tax Registration Number (TRN) will be provided to the user.
- A user needs to verify the email address and other details as and when required.
- Businesses will be notified by email and SMS when your TRN is generated.
Mandatory Documents required for VAT registration- What is a TRN Number
VAT registration process and fee submission will be done online. Following documents are required for the registration of VAT in UAE.
- Copy of Trade License
- Passport copy of the owner/partners who owns the license
- Copy of emirates ID of the owner/partners who owns the license
- Memorandum of Association (MOA)
- Contact Details of company (complete address & P.O Box)
- Concerned person contact details
- Email of the concerned person
- Bank Details including IBAN
- Owner has any other entities?
- Income statement for the last 12 months (Signed & Stamped by the owner or the manager)
- Expected revenue and expense for the next 30 days after VAT implementation
- Are they exporting or importing?
- Are they dealing with any custom department? If yes. What is the custom code? With the Copy of Dubai Custom Code Certificate
- Are they doing business with any GCC country? (Country name)
- If they are representing more than one entity, whether they want one tax group number for all the entities or separate tax numbers for each
- Experience of business (Owners or directors involved in any previous businesses before for the last 5 years?)
The submission of the documents will be done online. After online VAT registration, entity will get the Tax Registration Number (TRN) from Federal Tax Authority (FTA) within the duration of 2-3 weeks. Federal Tax Authority (FTA) will upload the soft copy of the ‘Tax Certificate’ by the end of January 2018. To get the attested hard copy of the ‘Tax Certificate’, Companies shall pay AED 500 and send an e-mail to firstname.lastname@example.org and the FTA will deliver (courier) the certificate to the given address.
What is a TRN Number -Tax Registration Number
Each entity who has registered under VAT, has a unique number generated known as Tax Registration Number. In short, it is called as TRN.
A tax registration number is the VAT Number or VAT Registration Number is assigned to each vat registered company for the purpose of identification by FTA. TRN gets generated upon registration.
The taxable person or entity who has been issued with a VAT registration number is called as ‘Registrant ‘. VAT number in UAE will be of 15 digits. The taxable person, entity or company who has received the VAT number is obliged to mention VAT Registration Number in various documents such as VAT returns, Tax Invoice, Tax Credit Note and in all other documents as prescribed by the UAE VAT LAW and Executive Regulations.
What is a TRN -Tax Registration Number –Significance Of TRN :
VAT in UAE, mandates every business to describe TRN in its invoices in order to claim credits. Businesses that have registered before 4 December have already got their provisional TRNs. Remaining businesses who have not registered under VAT should do so and get TRN number generated. With the TRN, registered companies can check their IT system to describe it in all relevant documents related to tax filing from 1 January 2018
TRN helps businesses to easily communicate with the customers, vendors, and suppliers in processing invoices that will require TRN mentioning on all tax-related documents. This way of raising TRN and invoice processing will definitely help businesses to claim tax credit benefits for paid taxes.
As TRN number is the starting phase to move in the right direction of VAT and compliance is very important in implementing VAT, even provisional basis TRN, an initial step, is the most significant move.The FTA said it had already issued provisional TRNs for tax groups and it will provide the same individual businesses shortly.
What is a TRN -Tax Registration Number –Detail Study
TRN is a unique identification number for business The records of sales and purchase made by an individual or business owner can be easily mapped using TRN. However, some traders in UAE are not including TRN number on their invoices and still charging VAT.
Those traders/ business owners who have not received the TRN certificate cannot charge VAT on their sale or service.
So it is important that customers are aware of the fact that unless and until businesses provide Tax Invoices with TRN number, customers should not pay VAT for the purchase made or services used.
Only After applying for VAT registration and successfully verification, VAT registration number will be issued.The Federal Tax Authority of UAE will issue VAT number after successful verification of your registration application.It is expected to have 15 digits.If a taxable person is already registered with FTA, he will be in possession of VAT registration number, using which he can join the tax group. If not, he must submit the VAT registration form and on submitting, a Tax Identification Number (TIN) will be issued. Using TIN, he can join the tax group.
Remember, a TIN is not a valid TRN, it is a number issued by the FTA for tax identification purposes only .It is mandatory for a registrant to mention his TRN number in all his returns. Only through the TRN number, the authority be able to identify the taxable person.
It is mandatory to mention the TRN number in the following documents:
- VAT Return
- Tax Invoice
- Tax Credit Note
- All other documents as prescribed by the UAE VAT regulations
How to check the Validity of a Tax Registration Number (TRN)?
The UAE’s Federal Tax Authority has created a portal to check the validity of a Tax Registration Number (TRN).To check the validity of a TRN, follow these steps:
- Log in to the FTA E-Services portal (www.tax.gov.ae) using your credentials.
- Access the ‘TRN Verification’ page on the top right.
- Enter the TRN Number in the Search Field.
- Click on the Validate button to view the results.
If TRN number provided by supplier/ service provider is correct it would provide the corresponding name in English and Arabic with the respective tax registration number in issued in UAE by the FTA (Federal Tax Authority) .
Validating the TRN on the Tax invoices received would simplify and ensure correct filing of VAT returns and settlement of payable tax within the time stipulated by FTA UAE. Newly registered businesses may take some time to get their TRN.
Businesses who have not received the TRN cannot charge VAT on their sale or service.
Therefore it is important that customers are aware of the fact that unless and until businesses provide Tax Invoices with TRN number, customers should not pay VAT for the purchase made or services used.
Late Registrations for VAT
The late registrations are currently open for all types of businesses that satisfy the threshold requirements but have not registered by the last date. A penalty of Dh20,000 will be levied from the companies that are eligible for VAT but have not registered in time.
These businesses will also not be able to charge VAT on their supplies without the tax registration certificate or TRN(Tax Registration Number).
The businesses who have provided incomplete or incorrect registration details are also not given their TRN or registration certificates by the FTA. These businesses are required to pay a fine of Dh20,000 before they can re-apply for VAT TRN.
TRNs over Tax Certificate
As per FTA businesses are not required to present a tax certificate in order to conduct their activities and can simply use their tax registration number (TRN). The FTA has insisted that a tax registration certificate cannot be printed or downloaded using a provisional TRN.
However, businesses that have acquired their TRN can conduct their business activities normally. The FTA website allows individuals to verify the TRN of any company registered with the FTA for value added tax (VAT) purposes.
A tax certificate is issued by the FTA after a successful VAT registration with the authority. It serves as an official confirmation from the FTA. The purpose of the certificate is to inform that the company is registered. Usually, the date on the certificate serves as an official date of registration.
FTA have not allowed for issuing the tax certificate, which becomes available once the final TRN has been issued. The Authority had issued these provisional TRNs to help businesses comply with tax regulations and to ensure operations are not disrupted.
Misconception of TRNs Validity
Misconceptions among businesses in the market that without a TRN certificate, they cannot deal with their suppliers/customers and there is no other way to verify the TRN number but to get the copy of the certificate from the supplier/customer.
Companies are asking for a tax certificate to verify the TRN number provided by the suppliers/customers The FTA noted that businesses that submitted their registration applications after the deadline set by the authority last December were given provisional TRNs to allow them to conduct business and comply with their tax obligations.Lack of awareness by many companies that they can verify the TRN number using the official website and therefore, there is no need for the tax certificate to verify the TRN provided to them.
Need to upgrade to Reach online VAT Accounting Software :
Reach Accountant VAT software is well designed to match all the needs for successful running of the business. The software can be used in different industries ,traders ,manufacturers, retailers, workshop ,business projects etc. It is an accounting software that can automatically manage your book of accounts, taxes, inventory, sales, purchases and more online quickly and securely.
Generate the VAT return file from the Reach online VAT accounting software.
It is very important for businesses to note that the VAT return file, generated only from the certified tax accounting software, will be allowed to be uploaded in the FTA’s e-tax portal. Here, certified tax accounting software refers to that software which meets the guidelines set by the FTA.
Thus, it is crucial for businesses to evaluate the right software as certified by the FTA, so that they are allowed to generate the VAT return file easily. Reach is FTA certified Online VAT Accounting software.
How to e-file your VAT Returns using Reach online VAT Accounting Software?
UAE registered companies are expected to file their first quarterly VAT return for Jan-Mar’18 by 28th April, 2018. The VAT returns in UAE are to be filed online.The registered businesses are required to generate VAT returns in an acceptable format as prescribed by FTA and upload the return file in the portal. Therefore it is important for businesses to have a right software which helps in accounting VAT and has a capability to generate the return file in XML or Excel format
The VAT return filing process in UAE is very simple and easy. The businesses with the right tax accounting software will be able to file the returns effortlessly and save time.
The registered businesses in UAE are required to generate the VAT return File from their accounting software, login to the FTA’s e-tax portal and upload the return file. On the basis of the uploaded return file, the e-tax portal will validate the file and accordingly the details from the file will be auto-populated in the online return form.
Most business owners have a number of tasks on their plate each day in order to help the company stay successful.
A solution that many businesses are starting to use is online accounting software. These applications make the process of calculating revenue, cash flow, and payroll easy and accurate. Your company’s financial information will be secure, but you can access it from anywhere with the correct security code. Simply put, online accounting software is a great investment for any small business.
Here are some of the benefits a business can discover through online accounting software:
- User Friendly
Online accounting software is generally easy to learn and use in day-to-day business operations. Once it is set up, you can keep your accounts up to date with a few regular data entries – information from bank statements and invoices can be automatically uploaded and processed into the correct categories. This means that you and your employees don’t have to worry about advanced accounting details – you can do what you need efficiently with a few clicks.
Since online accounting software stores data online, some business owners might be worried about security. However, security is a top priority for online business software companies. In addition, the online connection makes it easy to invoice clients, link up with bank information, and assess your business’ financial health wherever you are.
3. Cash Flow
Effectively managing your cash flow can help your business save money. Online accounting software makes it simple to determine incentives for employees and discounts for creditors or customers. In addition, the manager or business owner can view profits and losses in a comprehensible way.
One of the most important aspects of any business is invoicing, because it brings revenue to the company. Creating invoices with online accounting software saves you time and prevents losses caused by human error. You can even send invoices directly to clients through email to save paper and stamps.
For all types of business computations, accuracy is essential. Mistakes made in calculations can possibly lead to significant losses or other issues. Online accounting software keeps you from making these mistakes.
One of the greatest benefits of online accounting software is the cost savings. For small businesses running on tight budgets, hiring an accountant can be expensive. Even running software on an in-house server can end up costing a lot with all the upgrades and system tools. When a business buys online accounting software, it only has to worry about paying for the software and training employees to use it. And since many online software companies run on subscriptions, you’ll only have a small fee each month instead of a large one-time purchase.
Paperwork can be tedious and tiring, causing employees to get distracted and become less productive. Online accounting software is much more efficient than filling out paperwork because half the work is already done. This helps employees be much more productive than they were before.
Many types of online accounting software help businesses track trends, losses and profits far better than they could in the past. This may help the business discover new opportunities to improve revenue.
Top Features of the Reach Online VAT Accounting Software are:
- Accounting Management: All functions relating to accounts are inbuilt with the software. You can manage your Accounting Ledgers, Bank & Cash Operations, Purchase & Sales Estimates, Warehouse Allocations, Expense Recording, Expense Grouping, Payments – Part or Full, Journal Entries, Income and loss a/c, Balance sheets, Receipts – Part or Full, Contra Entries, Financial Reports, Day book.
- Tax Management: Our accounting Software automatically calculates the taxes relevant for every bill created. The Software is designed as per the government norms for calculation of VAT. It also has the option to add any number of taxes relevant to the business. In case of change in tax percentages a change it in the software on your own. All you have to do is add your tax percentage and our software will calculate the taxes automatically. This multiple tax scheme can also be applied to multiple products on a single purchase.
- Income Management: The Company can create Quotations then the same can be converted as a Sales order or Pro-forma invoice or Invoice. From Invoice you can create Receipts as well. Accountants will be able to know what payments have been received and what are pending in the reports. You can also set reminders for receiving payments.
- Expense Management: You can create Purchase Orders then the same can be converted as bill or payments. You can also create Debit notes for purchase returns. Accountants will be able to know which purchase bills have been paid and which are pending in the reports. You can also set reminders for making payments.
- Invoicing: Generates VAT compliant invoice of the company in the specified design as requested by the client or can choose from the available templates in the software. It also converts quotes to invoice .One of the features is the software can convert the Foreign currency invoices to base currency and further calculating the VAT at UAE standard rate.
· Print Tax Invoice In Arabic: Reach software lets you print invoices in Arabic, English or both, as per the mandated guidelines of GAZT and FTA.
- Auditor View: Full-fledged Financial reports, Tax reports VAT reports, read process by auditor, with e-filing options, PF & ESI Reports, Tax Consulting Modules are some to be named.
- Check Post for VAT returns: As the software has been designed exclusively to aid individuals and entities to be VAT compliant in UAE, the set of rules and regulation laid by FTA (Federal Tax Authority) of UAE are embedded in the software. Hence any process error will be popped up by the application can be viewed .For instance wrong Tax Registration Number, incorrect taxable figure, wrong taxation period.
- Automatic Update on Tax legal Sections: As the Reach software are cloud computed software gets upgraded to update any revised tax laws and section if any in future.
- Computation Of VAT Returns: The software is inbuilt with all the detailed crucial information on tax computation Tax Assesee can fetch all the details of all the taxable transactions It lists down transactions which are included and excluded in the VAT return calculate input tax, reverse charge and output tax to avail claim if any
- Filing Of VAT Returns: The registered businesses in UAE are required to generate the VAT return File from their accounting software, login to the FTA’s e-tax portal and upload the return file. On the basis of the uploaded return file, the e-tax portal will validate the file and accordingly the details from the file will be auto-populated in the online return form. Reach VAT software is designed to ease the process of filing returns and comes under the purview of FTA prescribed set of rules and regulations.
- VAT Reports etc.
- Calculate VAT automatically.
- VAT support in Sales, Purchase, Sales and Purchase returns, Journal entries.
- Generate Federal Tax Authority compatible tax reports.
- VAT Paid (charged by suppliers) and Vat Collection (Charged to customers) Analysis.
- Transaction wise details of VAT paid and VAT collected.
- Attach every Vendors/Customers VAT number and other details.
- VAT supported for Goods (stocked) and Service (non-stocked) items.
- Online application accounting.
- VAT Account Reconciliation, VAT Collection & VAT Paid analysis report.
- Report export to excel and other standard formats.
- VAT returns statement compatible with Federal Tax Authority standards.
Online accounting VAT software enables you to file vat returns, manage accounts and other business operations from any geographical area be it at the comfort of the house.
- Receipt: Receipts can either be manually entered or imported it in excel format easily.
- Payments: Payments can either be manually entered or imported it in excel format easily.
- Multi Company: Manage business through comfort of the smart phone.
- Tally Import: Tally files can be easily imported to Reach Software of various periods and manage business easily.
- Auditor’s Report: Full Financial Report are available,Read process by Auditor,Tax Reports,VAT Report with e-filing options,PF & ESI Reports,Tax Consulting Modules are some featuress mentioned.
- Mobile Application: Access business information through tabs and android smart phones, pick photos of expense vouchers and attach to expenses, daily profitability and other key reports can be viewed on phone.
- Bank Synchronization: Bank Statements can be imported in to Reach software through excel files.
- Security: There is complete security of data stored in the servers. Data can be accessed and control by creating access restriction. One time password facilities also ensures a check in the log in to the website.
- Run Business from anywhere: The business can be run access data from anywhere at your comfort. Just like checking mails from the laptop or systems.
- Free and Automatic Upgrades: At Reach Accountant you will be provided free services of upgrading the software frequently with new features and use it absolutely free.
- No investment in expensive hardware: The software is browser based. It just requires internet connection which can be connected to multi computers without using LAN and servers.
- API: The client can integrate the existing software with Reach accounting application ,
- Automatic Data Backup: Reach stores all the data in servers offsite with regular backups. Hence business information is safe and secure
· User Interface & Complexity:The software is designed to make its use friendly and easy,no cumbersome process to operate the application and software.
- Scalability:It is an VAT accounting software which can scale with your business needs. . Some software companies offer only one version of the product and some have progressive versions depending the business type or size. Reach Accounting software offers both integrated an entry level version as well as a feature rich version which you might not need for the current business processing but will definitely need in future for business development.
Top Two Features of the Reach Accounting Software
- Outsourced Accounting: The software enables to finish the outsourced accounts in less than 30 minutes.
- Real Time Accounting: Allows client to record sales and purchases online, while finalizing accounts that is checking the Audit trail, providing MIS reports, checking Tax reports, printing financial reports and filing taxes.
Reach has implemented the latest technology Cloud Computing to handle day to day business transactions just a click away from your browser from any part of the world.
Cloud Computing is a concept through which organizations can manage their data centres, processes and applications online via internet on the scheme of pay for use basis. Many of today’s small businesses find great advantages when adopting a virtual office environment. Rather than maintaining one centralized business location, employees are given the opportunity to work from home and connect via computer. Virtual offices can stretch across the country, or even exist within a small geographic area while still providing benefits to both employees and employer.
Advantages of Cloud Accounting Software:
– Nothing to install. Just signup and start entering your transactions
– You don’t have to worry about upgrades as all changes are pushed automatically. Online softwares are always up to date.
– Can be accessed from any internet enabled device at any point of time
– Cloud accounting software providers take care of backup and maintenance which is a cost saving for you.
– Data across all your offices is always synchronised.
– It can integrate with other cloud based applications.
-Complete security of information and data of business is provided
AED 1800 single user, per year
AED 3600 five users, per year
AED 5000 unlimited users, per year