Taxability criteria for Director Services?
Director’s Services: The general rule is that directors provide a service for VAT purposes to their company. As such, if the fees for services (in addition to any other supplies that might be made by the person) exceed the VAT mandatory registration threshold, namely AED 375,000, then directors are liable to register for VAT and charge VAT on the director fees. Specifically, services provided by a director should be taxable if:
- the director undertakes services on a regular, ongoing and independent basis (such as an individual who acts as an executive or non-executive director on a board or a number of different boards); and
- the total value of taxable supplies and imports made by the director, including supplies of director services, exceed the mandatory registration threshold.
A director may also choose to voluntarily register for VAT where the value of taxable supplies (including director fees) exceed the voluntary registration threshold of AED 187,500.
Which are the expense from which input tax are not recoverable?
Non-Recoverable Input Tax – VAT incurred on any costs which are used for a genuine business purpose, or which are incidental to a business purpose e.g. food and drink provided during a business meeting, shall be recoverable (subject to normal VAT recovery rules).
The food and drinks will become entertainment in nature if the purpose of attending the event is for food and drinks and hence, input tax paid on such expenses cannot be recovered.
Input tax can be claimed on hospitality expenses only if it includes the basic amenities provided to the employees. If hospitality is given for the purpose of attending events or entertainment purpose for Customers, Shareholders, Potential Customers, Officials, etc., such costs will be considered to be entertainment in nature and the VAT incurred shall not be recoverable.
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VAT RETURN FILING CUT OFF
FTA has issued fines for business which have filed their first VAT return today after the FTA office timing. AED1,000 fine was issued to businesses which filed late return.
Inorder to avoid fines , make sure to adhere to the deadline issued by FTA.
We protect our clients as we know the regulations very well. Our experts can help you to comply with the VAT law and the proper VAT accounting and book keeping requirement.
The UAE Federal Tax Authority (FTA) has released on Tuesday a simplified explainer on the conditions under which the value-added tax (VAT) will be applicable to the health and education sectors.
It lists down items that have zero VAT, those that are VAT-exempt and those that are not.
The Federal Tax Authority on Wednesday posted an unofficial translation of Cabinet Decision No. (59) of 2017 on Designated Zones for the purposes of the Federal Decree-Law No. (8) of 2017 on Value Added Tax [VAT].
Do you know it is mandatory to issue an invoice with the title TAX INVOICE? FTA has mentioned several requirements an invoice should have.
We have created a sample invoice as the requirement.