Frequently Asked Questions (FAQ)
While we have made an effort to provide a comprehensive view of the services offered, we do understand the need for prospective clients to get more information on various aspects of our service and also about ourselves. This FAQ section is aimed at providing as clear and unambiguous a response as possible to the most frequently asked questions (FAQ) in our line of business. These FAQ’s are categorized into three sections.
- The FAQ on Value Added Tax (VAT)
- The FAQ on Businessmen Services
- The FAQ on Overture Accounting and Bookkeeping LLC services
Do check out the FAQ for any questions that you have which have not yet been fully addressed through our website.
Please feel free to contact us for any questions which you may have which is not covered in this FAQ, this will help us update the FAQ to be more customer-centric.
Value Added Tax (VAT)
A value–added tax (VAT) is a consumption tax placed on a product whenever value is added at each stage of the supply chain, from production to the point of sale.
Value Added Tax (or VAT) is an indirect tax. Occasionally you might also see it referred to as a type of general consumption tax. In a country which has a VAT, it is imposed on most supplies of goods and services that are bought and sold.
The VAT is one of the most common types of consumption tax found around the world. Over 150 countries have implemented VAT (or its equivalent, Goods and Services Tax), including all 29 European Union (EU) members, Canada, New Zealand, Australia, Singapore, and Malaysia.
The VAT is charged at each step of the ‘supply chain’. Ultimate consumers generally bear the VAT cost while Businesses collect and account for the tax, in a way acting as a tax collector on behalf of the government.
A business pays the government the tax that it collects from the customers while it may also receive a refund from the government on tax that it has paid to its suppliers. The net result is that tax receipts to the government reflect the ‘value add’ throughout the supply chain.
Businesses will be responsible for carefully documenting their business income and costs and associated VAT charges. Registered businesses and traders will charge VAT to all of their customers at the prevailing rate and incur VAT on goods/services that they buy from suppliers. The difference between these sums is reclaimed or paid to the government.
A business must register for VAT if their taxable supplies and imports exceed the mandatory registration threshold of AED 375,000.
Furthermore, a business may choose to register for VAT voluntarily if their supplies and imports are less than the mandatory registration threshold, but exceed the voluntary registration threshold of AED 187,500.
Similarly, a business may register voluntarily if their expenses exceed the voluntary registration threshold. This latter opportunity to register voluntarily is designed to enable start-up businesses with no turnover to register for VAT.
All businesses in the UAE will need to record their financial transactions and ensure that their financial records are accurate and up to date. Businesses that meet the minimum annual turnover requirement (as evidenced by their financial records) will be required to register for VAT.
Businesses that do not think that they should be VAT registered should maintain their financial records in any event, in case we need to establish whether they should be registered.
VAT-registered businesses generally:
- must charge VAT on taxable goods or services they supply;
- may reclaim any VAT they’ve paid on business-related goods or services;
- keep a range of business records which will allow the government to check that they have got things right
If you’re a VAT-registered business you must report the amount of VAT you’ve charged and the amount of VAT you’ve paid to the government on a regular basis. It will be a formal submission and it is likely that the reporting will be made online.
If you’ve charged more VAT than you’ve paid, you have to pay the difference to the government. If you’ve paid more VAT than you’ve charged, you can reclaim the difference.
Concerned businesses will have time to prepare before VAT will come into effect in January 2018. During that time, businesses will need to meet requirements to fulfill their tax obligations. Businesses could start now so that they will be ready later. To fully comply with VAT, The FTA believes that businesses may need to make some changes to their core operations, their financial management and book-keeping, their technology, and perhaps even their human resource mix (e.g., accountants and tax advisors).
It is essential that businesses try to understand the implications of VAT now and once the legislation is issued make every effort to align their business model to government reporting and compliance requirements. The FTA will provide businesses with guidance on how to fully comply with VAT once the legislation is issued. The final responsibility and accountability to comply with the law are on the business.
The VAT will be charged at 0% in respect of the following main categories of supplies:
- Exports of goods and services to outside the GCC;
- International transportation, and related supplies;
- Supplies of certain sea, air, and land means of transportation (such as aircraft and ships);
- Certain investment grade precious metals (e.g. gold, silver, of 99% purity);
- Newly constructed residential properties, that are supplied for the first time within 3 years of their construction ;
- Supply of certain education services, and supply of relevant goods and services;
- Supply of certain Healthcare services, and supply of relevant goods and services.
The following categories of supplies will be exempt from VAT:
- The supply of some financial services (clarified in VAT legislation);
- Residential properties;
- Bare land; and
- Local passenger transport
The VAT will come into force on 1 January 2018. Any business that is required to be registered for VAT and charge VAT from 1 January 2018 must be registered prior to that date.
Everyone is urged to fully comply with their VAT responsibilities. The government is currently in the process of defining the exact fees and penalties for non-compliance.
Administrative penalties for violations will be decided by Cabinet and announced after issuance. There will be further penalties decided by Courts in the case of tax evasion.
The Federal Tax Authority is the designated authority for the implementation and management of VAT in the country. Their website is tax.gov.ae, the details of the law are available on the site under the section Legislation.
- Business advisory services
- Business / Trade Licenses
- Immigration clearance
- Renewal of trade/business license
- Employee Visas and Labor card
- Processing of spouse/family/ residence visas and maid visa
- Sponsor arrangements
- And many more.
Business advisory services cover inputs on forms of business available in the geography, the requirements for the various forms of business, advise on additional approvals, estimated costs, pros and cons of the mainland and free zone setups, visa eligibility, etc.
In sequence, reserve name, decide and submit an application for the form of business you want, obtain pre-approval, arrange for office, get the legal documentation completed, court attestation of legal documentation, submission of all documents for approval, Obtain trade license, register for immigration, register for labor, commence business.
Yes. Businesses under the professional category can be set up as a sole proprietorship (single expat owned) or Civil Company (more than one expat partners). A National is appointed as a National Service Agent (NSA). By law, the expats are the owners of the business and the National is only an agent for Government liaison.
Overture Accounting & Bookkeeping LLC FAQs
We are an LLC registered with the Department of Economic Development in Dubai mainland, with the primary approved activity of Accounting and Bookkeeping.
We evaluate your accounting requirements and provide you with a quotation. Once post discussions the method of delivery and pricing is agreed, we sign a contract with you to maintain your books of accounts. The contracts are usually for 12 months, with the option to renew as well as terminate at either parties discretion with adequate notice.
We are an accounting firm with professional, qualified and experienced accountants on our payroll/visa/ retainers. They perform your accounting either on your premises or off-site as per the contract. We work as independent part-time accountants for your business on a contractual basis and not as employees. In case, your business requires a full-time accountant, we can still provide the same under a contract on an outsourced basis. This is expected to reduce your cost and management time for accounting resources.
As a business it is your choice as to have an in-house system for accounting, we are open to working with any accounting system as the basics of accounts are the same for all the systems. However, we also provide you with a choice of maintaining your accounts on our systems. This reduces your cost and also frees up time involved in regular back-ups of your accounting data.
We are partners with several FTA certified cloud-based software providers (ZOHO Books, Focus, Align), this enables us to offer you a lower rate for our services as we can provide you with off-site services which cost us lesser than onsite accounting services.
Depending on the contracted activity we raise invoices. The contract clearly states the payment terms. Activities like set-up and backlog invoices are raised on completion or after a contracted period. The monthly accounting services are invoiced monthly on the basis of calendar months in arrears.
Accounting services are dependent on the volume of transactions to be processed along with the complexity or nature of transactions that a business has. This makes “one size fits all” kind of pricing unfair for SME and Start-ups. While we do have standard rates for our calculation, we evaluate each customer requirement and provide a discounted rate or premium rate form our standard rates based on the work involved.