They were established under Federal Law by Decree No. 13 of 2016. The primary task of the Federal Tax authority is to manage and collect federal taxes and fines related to it and distributing all the tax-generated revenues to the government, also applying the VAT registration UAE for the business.
The Federal Tax Authority's Chairman is His Highness Sheikh Hamdan bin Rashid Al Maktoum Deputy Ruler of Dubai. He is also UAE Minister of Finance while His Excellency Khalid Al Bustani takes up the position of Director General directly from his role as the Assistant Undersecretary of International Financial Affairs at Ministry of Finance (MoF), in which he was held for more than 37 years. FTA works along with MoF and drives to achieve economic conditions in the UAE and entirely focuses on profits derived from non-oil sources. The authority will work closely towards enhancing the country's financial stability and provide all the necessary guidance and support to business organizations and consumers to ensure that they meet their liabilities and better understand the application of taxation in the country.
Tax is how governments raise revenue from sources to pay for public services. Government revenues from taxation are usually paid for public hospitals, schools, universities, defence, infrastructure and other vital aspects of daily life required by the country's citizens. VAT is the indirect tax form collected by the government to build the country's strong economically strong.
Companies can register for Dubai VAT registration through the eServices section on www.tax.gov.ae. Before registering for the VAT account needs to be created in the online portal. VAT is applied equally to all the tax-registered businesses managed on the UAE mainland and in the free zone land on the country. However, if the UAE Cabinet defines a specific free zone as a 'designated zone,' it must be treated outside the UAE for tax purposes. The transfer of goods between designated zones is tax-free, which means the government will not charge any taxes.
How VAT affects Consumers and Business
As a general consumption tax, UAE VAT Registration will apply to most of the transactions of goods and services. However, a certain number of exemptions are granted on the taxes that are not imposed. With the increase in the VAT, the cost of living is likely to increase slightly, but it will be entirely dependent on an individual's lifestyle and amount spending behaviour. If an individual spends mainly on those relieved from VAT, then there are hardly any chances of seeing the increase in living costs.
The government has imposed a rule that requires businesses to be clear about how much VAT an individual must pay for each transaction of the good within the VAT business. Based on this information, individuals can decide whether to buy something or no luxury amenities, or it can be the basic need of a person.
Conclusion: Companies will be responsible for documenting all their business income, costs before VAT registration. All the registered companies charge VAT to all their customers at the profit rate and incur VAT on goods or services they buy from suppliers. The difference between these taxes is that they can be reclaimed or paid to the government.
