Are you VAT ready? Let's Taxplore..
Are you VAT ready?
When a country decides to improve the public services by collecting tax, why can't we get ready to adopt in our business? Epicor is a enterprise-class VAT ready ERP solution. Fine tuned and stabilized for the change.
There are two types of taxes which we pay to the government are Direct and Indirect. Direct Tax is paid by the person directly to government. Indirect Tax is paid to an intermediator and its collected by the government. As residents we don’t pay any direct taxes (e.g. income tax) as of now in UAE. On the other hand, an indirect tax is collected for government by an intermediary (e.g. a retail store) from the person that ultimately pays the tax (e.g., VAT, Sales Tax). VAT will be introduced in the UAE, and other Gulf countries, from the beginning of 2018 at 5 per cent.
Companies in the UAE.
UAE being a most powerful sector to set up a business, each quarter the company registration percentage is considerably increasing minimum of 14%. Companies that report annual revenues of over Dh3.75 million will be obliged to be registered under the GCC VAT system. Basically, VAT will be exempted for certain categories or introduced initially with 0%,5% rates.
Is Business modified or Costs more with the VAT?
Absolutely the consumer will bear the tax but during the supply chain and manufacturing, in each steps company should pay the tax to the manufacturer or supplier which can be recovered so this slightly modify the business processes. At the end, price of the product is increased to the maximum of 5% which falls on the end customer.
Top 10 practices to adopt VAT in your business.
Register for VAT if taxable supplies and imports exceed the mandatory registration threshold of AED 375,000.
Must charge VAT on taxable goods or services they supply.
May reclaim any VAT they’ve paid on business-related goods or services.
Record your company financial transactions and ensure that the financial records are accurate and up to date.
All the VAT transactions of your business should be submitted as a report to the government on a regular basis.
Update your technology and systems with VAT enabled.
Advised to have a proper mix of tax or financial experts in the organization.
Taxpayers must file VAT returns with the FTA on a regular basis (quarterly or for a shorter period, should the FTA decide so) within 28 days from the end of the tax period.
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.
Penalties will be imposed for non-compliance.
Epicor is ready with VAT:
Already with the built-in tax engine, Epicor eases the VAT processes. There are three principal tax programs that work together to properly allocate taxes and tax rates to invoices. Key set ups like tax type maintenance, Tax Liability Maintenance, Product tax maintenance are playing the vital role in the Epicor 10 implementation. Tax calculations are absolutely behind the scenes and accurately processed once the rate types and rates are defined properly. Reports are generated as per the requirement after the transactions, which can be used for filing.