How to register as a VAT Tax Agent in UAE

What is VAT?

How to register as a VAT Tax Agent in UAE

Indirect tax on the domestic consumption of goods and services, except those that are zero-rated such as food and essential drugs or are otherwise exempt such as exports. It is levied at each stage in the chain of production and distribution from raw materials to the final sale based on the value or price added at each stage .It avoids the double taxation (tax on tax) of a direct sales tax.

Advantages Of VAT in UAE:

VAT has been incorporated in all business transactions from January 1^st 2018.It will be a milestone for UAE as it will generate revenues for development of infrastructure and economic growth of the country. It is estimated that with the introduction of the new form of taxation “Value Added Tax” the economy may raise its annual revenues by Dh 12 billion in the first year of implementation of the VAT system. Gulf Cooperation Council (GCC) decided upon the implementation of VAT system as being one of the steps to diversify revenues due to the fall in oil prices. Tax reform was top priority in UAE succumb to the fall in oil prices and revenues. This fall in oil prices also affected real estate industry impacting the economic growth of the country. An indirect consumption tax regime like VAT is a natural progression of GCC government fiscal policy moving towards more effective and efficient tax systems in a competitive and integrated global economy.VAT could help the government to improve business conditions and maintain its reputation of being business friendly

UAE government also provides services like hospitals, roads, public schools, parks, waste control, and police which are usually covered through Government budget. However, VAT will provide with a new source of income, which will help in continuing these services at high quality. VAT is one such source of income which will provide huge impetus to the governments revenue.

Rate Of Tax in UAE- How to register as a VAT Tax Agent in UAE

Taxation rate in UAE will be 5% on all goods and services. Government has decided upon the marginal rate of 5% in the interest of the residents, as purchasing power of the consumer will not be hampered to an extent. Thus implementation of VAT will not have adverse effect on the people who are on the lower end of the spectrum.

However GCC has agreed on three VAT rates that will levied by the member states at the time computation of tax:

• Standard Rate
• Zero Rate
• Tax Exempt

Standard Rate

The rate of 5% will be applied on the all the business sectors.(does not hold good for zero rated and exempted goods).It is mandatory  that all  invoices feature tax value separately and then be added to the final bill value. All invoices must also display VAT registration number to enable buyer to claim VAT credit. Tourists in the UAE also pay VAT at the point of sale.

Zero Rated:

As the term suggests, the tax is computed at the zero rate. The tax column in the invoice of the sold good will be zero. Only the cost of the good will be charged.

In the contrary if tax has been paid for zero rated goods, tax credit of purchases can be availed for the sold good. You will need to record any zero-rated supplies in your VAT account and report them on your tax return.

Zero Rated Items:

• Exports outside GCC
• Food items as per GCC list
• Medicine and Medical Equipment as per GCC list
• Supply of sea, land and air means of transportation
• International and Intra GCC transport and services
• Charity organizations
• Gold, silver and platinum – 99% and more purity
• First supply after extraction of gold, silver and platinum
• Supply for educational purposes and related goods and services beneficial for educations
• Residential real estate – first supply

TAX Exempt:

The Tax Exempt supplies are not charged with VAT; however any tax paid earlier on purchases of the item is not available for credit.

As an example consider a taxi service (local passenger transport) that is tax exempt and will not collect any VAT from passengers. Though it will not collect any tax it will not be able to get credit for the tax they have paid for purchase of motor vehicles.

GCC: Tax Exempt List

• Imports of goods which are custom exempt
• Local passenger transport
• Bare Land

UAE: Additionally exempt

• Residential buildings other than zero rated
• Some specific financial services – margin based

What does a Tax agent mean?- How to register as a VAT Tax Agent in UAE

A Tax Agent is a person who has registered with the FTA, and who is appointed on another person’s behalf to assist and oversee that person’s tax affairs with the FTA.In simple terms it means Tax agents will be the mediators between the FTA and taxable persons in the UAE; they will be directly responsible for all of their obligations and rights`.It allows taxable persons to fully meet their tax obligations, while saving them time and effort, and reducing the margin of error in calculating tax.

Who can be a tax agent?

The tax agent must be of good conduct and behaviour, never having been convicted of a crime or misdemeanour prejudicial to honour or honesty, irrespective of whether or not he may have been rehabilitated.

As a new profession in the local UAE labour market, the FTA’s conditions, qualifications and accreditation requirements for Tax Agents will set a benchmark for other businesses to follow while hiring for tax-related positions. These criteria will also work as a catalyst for the development of new job skills to meet the new employment opportunities that will result from implementing the tax system in the UAE.

How to register as a VAT Tax Agent in UAE

The Federal Tax Authority (FTA) has officially opened registration for individuals interested in working as tax agents and for tax accounting software vendors, in addition to providing the necessary technical support to help these vendors as they assist UAE-based businesses comply with tax regulations

The FTA requested all vendors wishing to register with the authority for the tax accounting software accreditation to review the requirements and guidelines related to the accreditation .It also urged the vendors to submit the required documents, which include software vendor’s name; name of tax accounting software; version number of tax accounting software to be registered; date and validity of the listing; other vendor information (like trade licence number, address, etc.); contact details; and the required application form.

The Federal Tax Authority shall review the application and provide a preliminary approval when an applicant meets the above mentioned requirements, accordingly applicants must complete their registration as follows:

Registration requirements:- How to register as a VAT Tax Agent in UAE

1.Candidate  must hold an accredited qualification from a recognised university or institution showing your specialisation and practical experience, e.g.

• a certified bachelor’s or master’s degree in tax, accounting or law from a recognised educational institution; or
• a bachelor’s degree in any field plus a tax certification from an internationally recognised tax institution;

2) Candidate  must have at least three years’ relevant recent experience as:

• a tax professional;
• a qualified lawyer; or
• an accountant;

3) Candidate  must have the ability to communicate orally and in writing in both Arabic and English;

4) Candidate  must have passed any tests to meet qualification standards as specified by the FTA; 5) Candidate must be able to prove good conduct and  have never been convicted of a crime or misdemeanour prejudicial to honour or honesty, notwithstanding may have been rehabilitated;

6) Candidate must be medically fit to perform your duties as a Tax Agent; and

7) Candidate must hold professional indemnity insurance (where required)

Documents required for registration process- How to register as a VAT Tax Agent in UAE

During the application process Candidate will be asked for various documents. It is recommended that Candidate have the following documents   prior to starting  application:

• relevant degrees from educational institutions and/or internationally known tax institutes;
• proof of tax specialization and practical tax experience (e.g. employment contract with a professional firm);
• language proficiency documents;
• Police Clearance Certificate/Good Conduct Certificate;
• medical fitness certification/documentation; and
• Professional indemnity insurance (if required).

Candidates are required to upload copies of documents in some cases. Accepted file types are PDF, JPG, PNG and JPEG. The individual file size limit is 2 MB.The online application form should take approximately 15- 20 minutes to complete

Points to Note

It is recommended that Candidate save the form as when proceeding by clicking the “save and next” button at the bottom of the form. Candidate entries will not be saved automatically

For data security purposes, the online registration system will automatically log Candidate  out after a period of 10 minutes of inactivity.

Provide accurate information. Failure to do so could lead to delays in processing the application and ultimately, could lead to application being rejected. All sections marked with an asterisk (*) must be completed, otherwise will not be able to submit the form.

Process followed by FTA to select certified Tax Agent – How to register as a VAT Tax Agent in UAE

Individuals wishing to register as a tax agents must apply for registration with the FTA by filling an official application form. The authority may request additional information from the applicant, request a personal interview or ask about the references mentioned in their application. Moreover, the FTA shall examine all applications submitted and make a decision within 15 working days from the date of submission. If the authority requests additional information, the application will be decided on within 15 working days from the date such information is received.

Once the FTA approves an application, it will be registered within five working days from the date of approval – or any other date determined by the Authority – after all due fees are paid. Once Candidate has settled the registration fee, will be provided with a Tax Agent registration certificate which shows your Tax Agent Approval Number (TAAN). Successful candidate shall be added to the register for a period of three years, which can be renewed before expiry as per the mechanism determined by the FTA.

The authority may reject the application for registration in the following two cases:

First, if the applicant does not meet the registration requirements,

or if his/her registration adversely affects the integrity of the tax system in the country.

The FTA shall notify applicants of the approval or rejection of their application within 20 working days from the date of preliminary approval by the Authority. If the authority finds a Tax Agent not qualified, or if his/her work adversely affects the integrity of the tax system, or if they commit any serious violation of the tax law, the agent’s permit will be revoked. In this case, the authority notifies said Agent of the decision – as well as the reasons behind it – within five working days.

Duties of a Tax Agent

• Assist the taxable person with his Tax obligations according to a contractual agreement between the Person and the Tax Agent, in accordance with the Tax Agent’s duties as stated in the tax legislation.
• Without prejudice to any obligations in the Law, maintain the confidentiality of any information obtained in the course of performing his/her duties as a Tax Agent.
• Refuse to participate in any work or plan which may result in a breach of any law by any Person or may jeopardise the integrity of the tax system.

It is prohibited to practice the profession of a Tax Agent without completing the registration and receiving accreditation from the FTA, doing so constitutes a legal offense.

Need to upgrade to Reach online VAT Accounting Software :

Reach Accountant software is well designed to match all the needs for successful running of the business. The software can be used in different industries ,traders ,manufacturers, retailers,  workshop ,business projects etc. It is an accounting software that can automatically manage your book of accounts, taxes, inventory, sales, purchases and more online quickly and securely

 Reach accountant proves to be your best companion to resolve and   tackle all business issue pertaining to financial reports, auditing ,reformation of business structure in lines with new taxation regime.

Beneficiaries Of Reach Software:

Ideal for:

• Chartered Accountant
• Tax Consultant
• Outsourced Bookkeepers
• Business Consultants

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Top Features of the Reach OnlineVAT Accounting Software are:

• Accounting Management: All functions relating to accounts are inbuilt with the software. You can manage your Accounting Ledgers, Bank & Cash Operations, Purchase & Sales Estimates, Warehouse Allocations, Expense Recording, Expense Grouping, Payments – Part or Full, Journal Entries, Income and loss a/c, Balance sheets, Receipts – Part or Full, Contra Entries, Financial Reports, Day book.

• Tax Management: Our accounting Software automatically calculates the taxes relevant for every bill created. The Software is designed as per the government norms for calculation of VAT. It also has the option to add any number of taxes relevant to the business. In case of change in tax percentages a change it in the software on your own. All you have to do is add your tax percentage and our software will calculate the taxes automatically. This multiple tax scheme can also be applied to multiple products on a single purchase.

• Income Management: The Company can create Quotations then the same can be converted as a Sales order or Pro-forma invoice or Invoice. From Invoice you can create Receipts as well. Accountants will be able to know what payments have been received and what are pending in the reports. You can also set reminders for receiving payments.

• Expense Management: You can create Purchase Orders then the same can be converted as bill or payments. You can also create Debit notes for purchase returns. Accountants will be able to know which purchase bills have been paid and which are pending in the reports. You can also set reminders for making payments.
• Invoicing: Generates VAT compliant invoice of the company in the specified design as requested by the client or can choose from the available templates in the software. It also converts quotes to invoice .One of the features is the software can convert the Foreign currency invoices to base currency and further calculating the VAT at UAE standard rate.

·         Print Tax Invoice In Arabic: Reach software lets you print invoices in Arabic, English or both, as per the mandated guidelines of GAZT and FTA.

• Auditor View: Full-fledged Financial reports, Tax reports VAT reports, read process by auditor, with e-filing options, PF & ESI Reports, Tax Consulting Modules are some to be named.
• Check Post for VAT returns: As the software has been designed exclusively to aid individuals and entities to be VAT compliant in UAE, the set of rules and regulation laid by FTA (Federal Tax Authority) of UAE are embedded in the software. Hence any process error will be popped up by the application can be viewed .For instance wrong Tax Registration Number, incorrect taxable figure, wrong taxation period.
• Automatic Update on Tax legal Sections: As the Reach software are cloud computed software gets upgraded to update any revised tax laws and section if any in future.
• Computation Of VAT Returns: The software is inbuilt with all the detailed crucial information  on tax computation Tax Assesee can  fetch all the details of all the taxable transactions It lists down transactions which are included and excluded in the VAT return  calculate input tax, reverse charge and output tax to avail claim if any 

• Filing Of VAT Returns: The registered businesses in UAE are required to generate the VAT return File from their accounting software, login to the FTA’s e-tax portal and upload the return file. On the basis of the uploaded return file, the e-tax portal will validate the file and accordingly the details from the file will be auto-populated in the online return form. Reach VAT software is designed to ease the process of filing returns and comes under the purview of FTA prescribed set of rules and regulations.

• * VAT Reports etc.
• Calculate VAT automatically.
• VAT support in Sales, Purchase, Sales and Purchase returns, Journal entries.
• Generate Federal Tax Authority compatible tax reports.
• VAT Paid (charged by suppliers) and Vat Collection (Charged to customers) Analysis.
• Transaction wise details of VAT paid and VAT collected.
• Attach every Vendors/Customers VAT number and other details.
• VAT supported for Goods (stocked) and Service (non-stocked) items.
• Online application accounting.
• VAT Account Reconciliation, VAT Collection & VAT Paid analysis report.
• Report export to excel and other standard formats.
• VAT returns statement compatible with Federal Tax Authority standards.

Online accounting VAT software enables you to file vat returns, manage accounts and other business operations from any geographical area be it at the comfort of the house.

• Receipt: Receipts can either be manually entered or imported it in excel format easily.
• Payments: Payments can either be manually entered or imported it in excel format easily.
• Multi Company: Manage business through comfort of the smart phone.
• Tally Import: Tally files can be easily imported to Reach Software of various periods and manage business easily.
• Auditor’s Report: Full Financial Report are available,Read process by Auditor,Tax Reports,VAT Report with e-filing options,PF & ESI Reports,Tax Consulting Modules are some featuress mentioned.
• Mobile Application: Access business information through tabs and android smart phones, pick photos of expense vouchers and attach to expenses, daily profitability and other key reports can be viewed on phone.
• Bank Synchronization: Bank Statements can be imported in to Reach software through excel files.
• Security: There is complete security of data stored in the hard disk. Data can be accessed and control by creating access restriction. One time password facilities also ensures a check in the log in to the website.

• Run Business from anywhere: The business can be run access data from anywhere at your comfort. Just like checking mails from the laptop or systems.

• Free and Automatic Upgrades: At Reach Accountant you will be provided free services of upgrading the software frequently with new features and use it absolutely free.

• No investment in expensive hardware: The software is browser based. It just requires internet connection which can be connected to multi computers without using LAN and servers.

• API: The client can integrate the existing software with Reach accounting application ,

• Automatic Data Backup: Reach stores all the data in servers offsite with regular backups. Hence business information is safe and secure

·         User Interface & Complexity:The software is designed to make its use friendly and easy,no cumbersome process to operate the application and software.

• Scalability:It is an VAT accounting software which can scale with your business needs. . Some software companies offer only one version of the product and some have progressive versions depending the business type or size. Reach Accounting software offers both integrated an entry level version as well as a feature rich version which you might not need for the current business processing but will definitely need in future for business development.

Top Two Features of the Reach Accounting Software

• Outsourced Accounting: The software enables to finish the outsourced accounts in less than 30 minutes.

• Real Time Accounting: Allows client to record sales and purchases online, while finalizing accounts that is checking the Audit trail, providing MIS reports, checking Tax reports, printing financial reports and filing taxes.

Technology Used

Reach has implemented the latest technology Cloud Computing to handle  day to day business transactions just  a click away from your browser from any part of the world.

Cloud Computing is a concept through which organizations can manage their data centres, processes and applications online via internet on the scheme of pay for use basis. Many of today’s small businesses find great advantages when adopting a virtual office environment. Rather than maintaining one centralized business location, employees are given the opportunity to work from home and connect via computer. Virtual offices can stretch across the country, or even exist within a small geographic area while still providing benefits to both employees and employers. Yet certain business functions need to be managed differently in a virtual environment. When it comes to accounting, a cloud system can improve virtual office management, especially for tasks such as expense tracking and financial report consolidation.

Benefits of Cloud Accounting

1. Spread the cost of the software by making payments by monthly subscription instead of one lump sum.
2. All the upgrades for cloud accounting software are carried out by the supplier at no extra cost, so you are always on the latest version.
3. You can access cloud accounting software anywhere that has an internet connection, so no need to use a particular computer or be stuck in the office.
4. As the name suggests, all the data is stored securely in “the cloud” which means on the supplier’s bank of servers, continually backed up, so you never have to worry again about using up your own hard-drive or taking regular backups.
5. Best of all, with cloud accounting software, your accountant can share your data, so they can help you if you are stuck on recording certain transactions in your accounts, like the purchase of a new laptop.  They can post their year-end journals directly, so your data is always up to date, but more importantly we can be more help to you.  For example if you would like your accountant to check the figures for your VAT Return or even file it,or prepare some management accounts for you, and even help you with key decisions in your business, the sky is the limit with cloud accounting software.