VAT Impact on Change in the Permitted Use of a Building, UAE

The real estate sector is one of the most prominent sectors in the UAE. The residential type of supplies is significant in this industry. However, the real estate industry also involves other mixed nature of lease and sale agreements which can be complex for VAT treatments. These supplies involve building sales or leases, and it is one of the most frequent types of transactions in the market. However, one significant issue is determining appropriate VAT treatments. Companies must have the correct VAT registration in UAE and must also be aware of its implications. If you are changing the use of the building, there will be VAT implications, and you must know about the precise treatments to manage the issue. In this article, we will look at the impact of VAT calculations for the changes in the permitted use of buildings and how organizations can manage it.  

What Factors Are Considered on Determining VAT When Selling A Building?

When determining the VAT treatment on a building for sale, the use of the building on the date of supply plays a pivotal role. The building is considered an invisible good this is why the current usage is taken into account at the moment of sale. The standard rate of tax will depend on the nature of the building. Thus, if the building is considered commercial on the date of supply, the tax will be charged per commercial rate. However, the changes will be different if the building is residential. If you are unsure about the VAT rate, you should enlist the help of a professional company that offers VAT services in the UAE. They will help you determine the tax charges and allow you to be prepared for the expense in advance.

Step To Identify A Residential Building

Residential buildings are used or meant to be used by a person as their place of residence. Thus, if someone has bought a building for residential purposes, it is considered a residential property. However, the VAT regulations exclude hotels, motels, bed and breakfasts, and hotel apartments from this criteria. Even though these places are for residential purpose, it is not necessarily used by one person. These places are used by guests, and this is why the VAT treatment of such buildings is different. Thus, if you need to determine the VAT treatment and tax charges for your property, you will need a professional company that offers its VAT services in UAE. They can assist you with the registration process along with the VAT treatment as well.

Don’t Forget About These Steps To Determine The Date Of Supply For The Sale Of A Building

The date of the sale of a building is integral during the sale process. It is the earliest date among the following. Thus, organizations must choose the earliest time to determine the date of the supply of the building.

  • The date on which the purchases received the possession of the building.
  • The date when the tax invoice is issued for the sale.
  • Date when the ownership is transferred (in most cases, it is the registration date)
  • The date when the seller receives the payment for the sale.

Whichever comes first is considered as the date of the supply for the sale of a building.

The Possible VAT Treatments On Supply Of A Building in UAE

A trusted company can help you with the process of VAT registration in the UAE, and also allow you to determine the accurate VAT treatment as well. Since the VAT treatment depends on several factors, it is better to enlist the help of a professional. A sale or the lease can be a standard rate, a zero rate, or maybe fully exempt depending on the nature of its use and date of supply. Thus, it is integral to consider both of these factors to understand the impact of VAT. The residential buildings are zero-rated on their first supply within three years of construction. Afterward, the lease or sale of the building will be exempted from VAT. In the case of a commercial property, the building will be taxable at a standard rate of 5% on both lease and sale.

Final Words

VAT is mandatory on all building supplies. Thus, determining the correct impact allows you to calculate the correct tax charges and file taxes on time. Several trusted accounting companies offer their services that will assist you with VAT treatment and calculation. HALSCA is among the top companies that provide trusted VAT services in the UAE. Take a look at their services, or get in touch with their expert team by contacting them at sholy@halsca.com.

Tips To Avoid Internal Audit Mistakes In Dubai, UAE

Accounting firm in Dubai

Finances are the fuel of every business, and even the most minute errors can cause massive losses. That is where internal audits come to the rescue. By auditing your books in the house, you can resolve errors and strengthen the internal controls of the company as well. However, an internal audit is only beneficial when the process completes accurately. If you do not have the time and resources to perform this process, you should enlist the help of a partner who can help you with an internal audit in Dubai.

Several firms offer their services to business owners and help them get their accounts in shape before the external audit. However, if you have decided to conduct the internal audit yourself, you should ensure the highest accuracy and precision. To help you with the same, we have put together this list of tips that will allow you to avoid frequently made mistakes during an internal audit. By avoiding these errors, you will be able to audit your books better and get a clear and precise understanding of your firm’s finances.

Look At The Bigger Picture

It is an integral factor for an impeccable internal audit. When professional companies offer their internal audit services, they keep the organizational goals in mind. By keeping the bigger picture in mind, you will be able to steer clear of the wrong decision and ensure to take actions that align with your organizational goals. Looking beyond the surface will help to increase your productivity and measure your organization’s compliance with the standards. Thus, you will be able to check and review the performance of your employees and firms and determine if you are on the right track.

Keep Your Audit Report Short And Concise

Every company that offers an internal audit service in Dubai can tell you how massive audit reports can affect the firm. Since this report goes to the upper management for reviewing, the shorter it is, the better it will be for the superiors to assess it and express their views. The report primarily helps to highlight the weakness of the firm and suggest improvements. Thus, you should stick to this formula and refrain from adding excess information to it. A concise and clear report will introduce action plans that you can implement to strengthen the weaknesses and improve the overall functioning of the firm.

Don’t Forget About Planning

Internal audit is planning heavy. Even though planning is a crucial aspect of every critical decision, it is even more internal when auditing the firm. Thus, while conducting an internal audit in Dubai, you should plan the requirements of all essential factors like machines, workers, equipment, and funds. You should make these plans after a careful review of the production requirements. With accurate planning, you will allocate an adequate amount of funds for every factor and ensure maximum benefits from a smooth production chain. Also, with resource planning, you will be able to calculate the net worth of your inventories, assets, and other materials, allowing you a clear picture of your firm’s resources.

Audit firms in Dubai

Value Addition

The process of audit and micromanagement go hand-in-hand. You cannot talk about one without referring to the other. Thus, when working on an internal audit in Dubai, you should also invest time in developing an ideal micromanagement process. The final goal of this addition is to add value to the audit. Thus, opt for a strategy that allows you to streamline the audit process without dwelling on the small details. A firm has many elements, and auditing even the tiniest department can lead to time wastage. Thus, you should develop an efficient workflow that enables you to take all the essential factors into account without being time-consuming.

Prepare For Uncertainties

It is not just true for internal audit services but for every department and working process. You may experience some unexpected hiccups during your audit process. Hence, make sure you have a plan to help you deal with the surprise element. Having suitable instruments in place will help you minimize the waste of time and resources and ensure your audit process remains efficient as ever.

Final Words

Internal audits are integral for all firms. Accurate audits add a considerable amount of value and provide a better understanding of the firm. Getting your firm audited from trusted partners will allow you many insights beneficial for your firm. HALSCA is one of the leading firms that offer the best internal audit service in Dubai. Visit their website for their exceptional services, or get in touch with their expert team at +971 55 651 9937.