VAT in Sharjah
How does it affect your business?
As the third most populous city in the Emirates, Sharjah, or “Rising Sun” is very popular as a place to live with its reasonable rents and calmer, more laid-back lifestyle compared to Dubai. And, of course, people like to live reasonably close to where they work, so quite naturally, business is well-established and profitable in Sharjah.
Of course the new VAT (Value Added Tax) applies equally across all of the GCC, and Sharjah is no exception, so it is important that everyone understands it and doesn’t run into financial penalties from the FTA (Federal Tax Authority) for not being in compliance.
VAT was first applied back in 2018, in a two stage process. VAT is a general purpose indirect tax, covering the provisioning of both Goods and Services. It is applied at a rate of 5% in the UAE and is expected to generate revenue in the neighbourhood of Dh12-20 billion annually, in support of local infrastructure improvements. We should consider ourselves lucky to have such a low VAT rate. In Sharjah’s twin city of Grenada in Spain, VAT is 21%!
Any companies exceeding Dh 375,000 in gross annual income must register for VAT and submit their VAT returns to the Federal Tax Authority (FTA). Newcomers to the region, or someone starting up a new business, might be overwhelmed by the necessities of VAT reporting if this is the first time you have encountered them. Luckily for you, PushDigits Chartered Accountants is here to guide your way as you become familiarised to the new system.
VAT was only established in UAE in 2018, but it is firmly entrenched in 167 of the 195 countries in the world. In the EU, VAT ranges from 17-27%, but in the rest of the world it is generally in the mid-teens. The countries with the lowest VAT include Andorra, Bahrain, Canada, Jersey, Malaysia, the Maldives, Nigeria, Niue, Saudi Arabia, Taiwan, and, of course, the United Arab Emirates!
PushDigits’ far-reaching international experience provides a powerful advantage over most other VAT and tax consultant firms you’ll find! Understanding how the system works and how to prevent problems from arising in the first place is an advantage you won’t get elsewhere.
In Sharjah, PushDigits is your best choice for Tax & Vat Consultancy, since we are already working with many of the largest institutions. When the biggest firms in the region trust us, you know that you can, too!
How VAT Works
In the simplest way possible, here it how the Value Added Tax works:
- As an example, a farmer grows dates, selling his product to a processor. The farmer collects VAT from the processor, which is submitted to the FTA;
- The dates are then converted to “date syrup” and sold to a retail store, and the processor collects VAT from the retail store on behalf of the FTA, while also obtaining a refund for the VAT paid to the farmer;
- The retail store then sells the date syrup to an end-user, who pays VAT, which is submitted to the FTA, and the retail store receives a refund of the VAT paid to the processor.
These stages intertwine to make sure that whoever is actually using and benefiting from the product is the one who pays the tax. For example, the person converting dates to date syrup, who buys a machine for that purpose, is the one who pays the VAT.
Reliable Professional VAT & Tax Consultants
As reported in the Khaleej Times on 12/20/18, the FTA was issuing Notices of Audit to companies to check whether they were complying with the FTA rules for VAT-reporting. Audits would commence 5 days following the e-mail notice, to minimise preparation time for the audit.
VAT audits cause significant disruption, particularly in offices that are not in compliance with the FTA regulations. This is why you need PushDigits Chartered Accoutants to make sure you are prepared for a surprise FTA audit. You do not want to pay the substantial financial penalties for compliance failure.
Our customers tell us that they are extremely satisfied with our proven experience in tax consultancy, our broad experience with numerous clients, and the remarkable skill and dedication of our amazing and highly-qualified tax consultants. Immodesty aside, it is really easy to see why our customers love us!
They tell us that they have the confidence to outsource directly to PushDigits because it eliminates the worries about the intricacies of the system. They are thrilled to be released from the responsibility of “figuring it all out”. This gives them the freedom to get on with undertaking things that will actually advance and develop their business.
We encourage participation by your staff, and will show them how to reorganise their efforts to report as efficiently as possible. Understanding the requirements of the FTA makes the task much easier. We can do it for you, or we can provide advice on how to:
- Register with the FTA;
- Stay informed about all the changes in FTA and VAT regulations;
- Calculate your VAT payable and refundable amounts;
- File VAT returns with the FTA; and
- Discover all the subtle aspects of the VAT return.
In Sharjah (and throughout the UAE) it is optional to register for VAT when your taxable supplies or taxable expenses exceed Dh 187,500 per annum. We’ll explain when and why it might be a good idea to register in order to obtain the VAT refunds and of course pay any VAT liabilities.
Our expertise is your most valuable tool. There’s more to it than just the letter of the law; it is about applying experience with handling VAT before your annual income exceeds Dh 375,000, and VAT registration becomes obligatory—because there is no substitute for experience!
Full-time, Part-time, or Outsource?
Our PushDigits staff is comprised of more than 30 top-rated accountants, who undergo constant training to make sure they understand every new aspect about bookkeeping, accounting practices, and most particularly, taxation rules.
We assure that we comprehend all of these things thoroughly. We would even be glad to explain them to you, if you desire. However, one of the things our customers comment on most frequently is being able to transfer all of these accounting responsibilities to PushDigits, confident that it is in good hands, the work will get done, and there will never be any problems.
If you need onsite, full-time accountants on a weekly, monthly, semi-annual, or annual basis, we can do that. We can also provide part-time accountants, on an hourly, weekly, monthly, or seasonal basis, if required.
By far, the favourite choice is to completely outsource your accounting needs to PushDigits. This is particularly true for new companies just starting out, or small companies experiencing large growth.
Building an effective, reliable accounting department is an enormous undertaking. One of the biggest things opposing that (aside from the sheer expense of paying for it all) is finding sufficient qualified people to hire.
And this remains true, even before you consider salaries, vacation time, renting office space, parking facilities, sick leave, visa fees, air flight expenses, and provisioning all of computers, smartphones, laptops, stationary, business cards, and all the other impedimenta that are part of accomplishing the job.
Hiring VAT & Tax Experts is always your best choice. Hiring the right experts from PushDigits, who are qualified tax consultants in Sharjah, with proven experience in tax consultancy, Tax training, tax planning, tax disputes resolution with FTA, international tax, having extensive experience with numerous clients, and who also happen to understand crises resolution is priceless.
Call us today and let’s get this challenge handled, so you can get on with the business of running your business!