Maximizing VAT Compliance in Dubai: Tips for Businesses

Since the introduction of Value Added Tax (VAT) in the UAE in 2018, businesses have had to adapt to a new tax environment. While VAT is a relatively straightforward consumption tax, compliance requires accuracy, timely submissions, and a thorough understanding of Federal Tax Authority (FTA) regulations.

Understanding VAT in the UAE

VAT is a 5% tax levied on the supply of goods and services at each stage of the supply chain. Registered businesses collect VAT from customers and remit it to the FTA, while also claiming refunds on VAT paid to suppliers.

Who Needs to Register for VAT?

Businesses must register for VAT if their taxable supplies and imports exceed:

• Mandatory registration threshold: AED 375,000 per year

• Voluntary registration threshold: AED 187,500 per year

Failing to register on time can lead to substantial penalties.

Common VAT Compliance Challenges

Many businesses face issues such as:

• Incorrect tax invoices

• Late or inaccurate VAT returns

• Misclassification of zero-rated and exempt supplies

• Poor record-keeping

These mistakes can result in fines and damage to your business reputation.

Tips for Ensuring VAT Compliance

1. Maintain Accurate Records – Keep detailed records of all sales, purchases, and VAT transactions.

2. Issue Proper Tax Invoices – Ensure invoices meet FTA requirements.

3. Understand Zero-rated & Exempt Supplies – Avoid incorrect VAT application.

4. File Returns on Time – Late submissions can lead to penalties of up to AED 2,000.

5. Work with a Professional – Engage qualified tax consultants to handle VAT compliance.

   
   

How Arzonell Accounting & Tax Can Help

At Arzonell, we offer end-to-end VAT services including registration, return filing, compliance reviews, and VAT audits. Our team ensures you stay compliant while optimising your VAT position.

📌 Let us take the complexity out of VAT so you can focus on running your business. Contact Arzonell today!