To run operations smoothly and efficiently, businesses have to pay taxes to the government as per the tax regime in the country. This promotes transparency in business and acts as evidence in circumstances when tax audits are carried out. VAT payments prove that businesses are running legally and no misconduct is carried out, promoting credibility. For paying taxes, every business eligible under the scheme is issued a special number, i.e. Tax Registration Number or TRN.
In UAE where a new tax scheme has been implemented recently, business owners who have their taxable supplies and exports exceeding AED 375,000 per annum ought to apply for VAT registration, after which they will be allotted a 15 digit TRN.
Value Added Tax or VAT is a tax on the expenditure or use of goods and services imposed at each point of sale. The bearers of the cost will eventually be the end-consumer. Organisations are obliged to collect and account for the tax in aid of the government. VAT in UAE is applicable uniformly on tax-registered businesses running both on the UAE mainland and in the free zones.
A taxable supply refers to a delivery of goods or services made by a company in the UAE that may be taxed at a rate of either 5% or 0%.
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