Introduction of VAT registration for new companies (Not so scary)KWSME
Value Added Tax (VAT) is the tax that is applied to the product or service on every stage of the supply chain. This means that whenever a product or service receives further attention and detailing, value is added. Therefore, every time a value is added to the product or service, the value added tax is applied. For example, when a plain soda can has its brand name printed upon, value is added.
A business which accumulates over £85,000 threshold of taxable turnover, they are required to register for VAT. The benefit of registration is that the amount paid by company A to another for goods and services is reclaimed by the company A. Furthermore, the company appears larger and more appealing to clients amongst other unregistered companies.
Moreover, if a company is unregistered for VAT, the turnover of the business is assumed lesser than the specified amount. This makes the company look smaller and less successful amongst the competing companies in the market. Furthermore, if there are other registered companies, the unregistered companies lose their position in the market which may cause loss of customers and in turn cause a decrease in their sales.
Why was VAT introduced?
Value added tax was been introduced in the UAE to increase revenue for the government. The authorities were planning on providing even better facilities to people in the UAE. With little or no taxes coming from certain businesses, the government had to make arrangements generate revenue in order to meet the increasing government expenditures that were becoming a need. The Tax will help the authorities in providing better facilities like, medical facilities, meet the increased cost of transportation and infrastructure, meet the costs that are rising due to increasing population and develop areas that were still underdeveloped.
Impact VAT on your business
Due to regulatory actions, every business in Dubai is affected. This has also happened for the businesses which were required to register for the value added tax, with the Federal Tax Authority (FTA). Businesses that have revenue of more than AED 375,000 per annum will have to show the collection of the tax and provide the proof of financial transactions to the authorities for verification of eligibility of the tax deduction. The business in Dubai, which tries to transfer the costs of the tax to the clients and customers, will have to raise charges and prices so that the post-tax profit and revenue remains at the required level. This might cause businesses to lose customers and clients depending on the nature of the products and services being provided and elasticity of the products or services in question.
We are here to help you
It is very important for upcoming business set ups to have knowledge of the market and its trends in order to make a place for themselves. However, it is even more important to be aware of the policies of the government regarding different businesses. This also includes being up-to-date when it comes to tax related policies such as the application of value added tax. You need to know what the government is planning and how you need to adjust to the new changes that are seen in the market.
Therefore, keeping in mind the comfort and ease of their clients, KWS Middle East, provides the best consultancy and company formation in Dubai services.
Experts at the firm help you understand the processes for VAT registration in UAE. They will also help you maintain your operations when your VAT registration in UAE is complete.
The business consultants in Dubai help speed up the business registration processes. The company formation in Dubai processes are also fastened by the firm, by working closely with the appointed government and non-government authorities. Furthermore, the Business consultants in Dubai provide counselling for the new business owners and provide support services to complement business operations.
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