Value-added tax is, to date, a complicated and complex system for the general public and business organizations in the United Arab Emirates. The individuals do not have to register for value-added tax in the country, and only the business organizations exceeding the specified threshold are required to register for VAT and meet all the other requirements.
However, it does not mean that the general public is exempt from paying VAT. Value-added tax is imposed on goods and services. So, if an individual buys a product or service in which VAT is applicable, it will be included in the invoice, and the dealer or owner of that particular business will have the responsibility of paying VAT to the authorities. During the whole process, preparing a proper tax invoice is critical, which is often ignored.
Give a detailed read to this article to learn in detail about everything you should know about VAT tax invoices in the UAE.
Top 6 Points to Consider About VAT Tax Invoice in UAE
Here are some filing VAT tax invoices in not like filing any random invoice. The organization registered under value-added tax has to take special care of tax invoicing as they have to share the records with the authorities. If there is any issue with it, the business organization will be held accountable. So, it is only right to know your responsibility and fulfill it to the best of your knowledge in order to reap benefits instead of earning loss.
Here are some of the most critical points you must consider regarding value-added tax tax invoices in the United Arab Emirates.
Tax Invoice Format
The basic point to consider about value-added tax invoices in the UAE is the tax invoice format. The format of the tax invoice is not the same as a regular invoice. It should specifically mention “tax invoice” on the top. Without that, the tax invoice will not be considered credible. Many organizations consult services of the best vat consultancy in Dubai to avoid falling prey to such little mistakes.
The next point to essentially consider for VAT tax invoices is fulfilling the major requirements. Following the proper format is one of the major requirements. Following the proper format is one of the major requirements, There are free invoice templates online which offer versions between VAT and non-VAT businesses. Apart from that, the tax invoice must contain the TRN number of the business organization to prove that it is registered for VAT. Moreover, it should mention the prices inclusive of VAT. Lastly, showing the specific VAT amount charged to the consumer must also be written on the invoice.
Simplified Tax Invoice
The next point you should be aware of regarding VAT tax invoices in the UAE is the simplified tax invoice. The simplified tax invoice should mention the tax invoice, name, address, and TRN number of the business organization. In addition, the simplified tax invoice should mention the issuance date and the description of the supplied goods and services. In short, a simplified tax invoice should include all the basic requirements.
Full Tax Invoices
There is another type of VAT tax invoice that is termed full tax invoice, which the business organizations must know about and utilize when required. The full tax invoice is the one that contains the details of the name, address, and TRN of the recipient. Moreover, it includes a unique and sequential invoice number. Price per unit of the supplied goods or services is also mentioned on the full tax invoice. Lastly, if the consumer availed of any discount, that too will be mentioned on the invoice.
Treatment of Tax Invoices in Foreign Currency
Another critical point that business organizations must consider reading value-added tax invoices is the treatment of tax invoices in foreign currency. Receiving payments in foreign currencies is quite common in UAE due to the increased number of tourists and foreign nationals. The business organizations must mention the payable amount in AED on the tax invoice to avoid any misconception.
Administrative Penalties for Violations
The last and most important point that you must consider regarding value-added tax invoices in the UAE is the administrative penalties for violations. Incorrect filing of value-added tax invoices can be considered an attempt to evade or manipulate tax for which you can be held accountable. The business organizations found doing so will have to pay a fine of AED 5000. So, if you have any concerns or confusion, hire the service of the VAT experts to take care of the matters on your behalf, instead of committing mistakes and earning penalties.
Recheck the tax invoices and fulfill your responsibility!
Business organizations are liable to fulfill all the conditions and requirements of the federal taxation authority. If you have any confusion about VAT, get in touch with professionals and make sure to comply with all the legal requirements to avoid negative repercussions.