VAT classification for Schools & Nurseries
VAT Classification for Schools & Nurseries
23 May 2021Before we can get to the regulations, if you’re an online business/service or an e-commerce business in uae, here’s a quick brush up on some basics:
What is VAT?: VAT is an indirect form of tax. This is a tax that is not a burden on your company, but on the end consumer. You will charge & collect VAT from the customer and pay this (after reducing the VAT on your expenses) to the FTA. If your customer is a business and is registered for VAT then they will be able to claim back this VAT from the FTA. So being registered to VAT, will not impact the income you earn.
When should you register for VAT? : To decide when to register click here to read more about when you must take this decision.
1) (Taxable supplies + Imports) crosses the Mandatory threshold (AED 375,000) you must register
2) (Taxable supplies + Imports + Expenses subject to VAT) crosses the Voluntary threshold (AED 187,500) you have the option to register.
If you are not a resident in UAE and do not have another resident in UAE who will take the responsibility to account for VAT, you will need to register for VAT as well based on the above criteria. However, do note you cannot register for VAT voluntarily on the bases of expenses subject to VAT in UAE.
If you have an app, a website or use any online platform to make sales, like every business in UAE you need to fully comply with all the VAT requirements.
If you decide to register you will then have to start charging VAT to your customers, when applicable, raise tax invoice for each sale and also file for your VAT returns quarterly. Don't worry, it's not as complicated as it seems. We are here to simplify this for you.
Not sure how to go about this? Drop us a line. We have been handling UAE VAT Filing and Returns since it was introduced.
One of the main advantages of being registered is that you now have the opportunity to claim back the VAT on all your business expenses except-
1) Certain entertainment expenses,
2) Purchase, rent or lease of vehicle that is also available for personal use.
Yes, once you are registered for VAT, you must raise a tax invoice. If your invoice value is over AED 10,000, you then have the option to raise a simplified tax invoice, which has less requirements as per the law. If you want us to verify if your tax invoice meets the compliance requirements, feel free to get in touch with us for a free consultation.
Yes! If you do not have a business in UAE that will account for your VAT, then you need to register for VAT based on if you cross the threshold. You will be issued a Tax Registration Number (TRN) and meet all the VAT compliance requirements in UAE.
You need to find out where the service is being enjoyed. If it is in the UAE, the place of supply will be in the UAE, and VAT will be applicable, if it is outside UAE, then the place of supply is outside the UAE, and no VAT will be applicable.
This depends on what the agency agreement is. If the agent is simply a marketplace connecting the principal supplier to the end customer - This is similar to the case of Amazon, or Zomato. In this case, the obligation to account for VAT is of the principal supplier, and you are directly making the sale to the end customer. The agent will charge the supplier the agency fees, which in general will be charged 5%.
If the agent directly makes the sale to the customer & does not disclose you as the primary supplier -
There are basically 2 transactions that happen here simultaneously. You will have to raise an invoice with VAT to your agent. The agent will raise an invoice with VAT to the end customer.
You will be penalized AED 20,000 by the FTA for late registration. You will be given an effective date of registration based on when you crossed the threshold. Because of this, you will be required to file returns in the past. You will then have an additional penalty for late return filing of AED 1,000 for the first return and AED 2,000 for each return after that. There will also be a charge for a late payment fee, which will be a percentage of the payable amount, this can go up to 300%.
Schedule a quick free consultation for professional advice on VAT registration.