VAT In UAE: Top Ways On How Small Business Owners Can Save On Tax

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After VAT Registration in UAE, a lot of business owners prepare their own Value Added Tax (VAT) returns. Filing VAT returns regularly can take lots of precious time and resources that should’ve been used for something more important like the growth of the business. It is, therefore, crucial to ensure you have the help you need from experts. Regulated tax agents in UAE can also help in reducing the risk for errors in VAT return filing, helping you save money which you would’ve paid from administrative penalties imposed on your business by the Federal Tax Authority. 

In this article, we’ll provide you with tips on how your small business can save on tax apart from what we mentioned earlier. Read on!

Ask for VAT refund for mileage 

A lot of business owners, most especially those who are operating limited companies, ask for VAT refunds for mileage which cover business motor or vehicle expenses. It’s possible to claim back VAT on fuel and gas for a mileage claim. Fuel is determined by the FTA’s advisory fuel rates. We suggest you find the relevant rate for fuel per kilometer or mile or talk to a regulated tax agent in UAE for a more definitive answer regarding your specific situation. 

Select the right scheme for VAT 

There are a number of VAT schemes in UAE that your business may benefit from. Depending on the industry or sector you belong to, you may be able to benefit the most from the flat rate scheme for VAT where VAT is calculated as a percentage from gross sales. 

Ask for VAT refund on bad debts 

When the debt of a customer has been pending for more than 6 months plus you suspect you won’t be able to get paid by this specific customer, then you can claim VAT you have paid to the tax authority in the country. We suggest you review your account receivables regularly also. A way of avoiding having to process VAT reclaim on bad debts is to utilize a cash accounting scheme for VAT. With this, you don’t have to include VAT from sales on tax returns until the customers have actually paid for the items or services (or VAT from business purchases until you’ve settled their payments).

Make a separate corporate bank account for VAT purposes

VAT is a kind of tax wherein business owners perform the tax collection on behalf of the Federal Tax Authority. It is important that a business manages its cash flow successfully as it is incredibly easy to accidentally spend VAT as if it is the business’ working capital. 

The result being cash isn’t readily available when it is time to make the necessary payments to the Federal Tax Authority. An excellent way in avoiding this issue is setting up a separate corporate bank account and use it for VAT purposes only. This way, you won’t be surprised by the end of each VAT period. 

Seek the help of regulated tax agents 

Reduce the risk of your business in committing errors by seeking the help of experienced regulated tax agents in Dubai or UAE. Having a professional or team handle crucial tax affairs will provide you with peace of mind. What’s more, regulated tax agents in UAE can eliminate the risk in declaring VAT twice and not claiming back VAT for late received tax invoices. With expert help, it makes it easier for you and your business to handle VAT returns filing and VAT reclaims. 

If you’re interested in learning more regarding Value Added Tax in UAE, Click here for more about VAT Registration Dubai!