Value Added Tax, or VAT, was recently implemented in the United Arab Emirates. Businesses levy this value-added tax at each stage of their supply chain. No matter what cuisine they serve, restaurants in the UAE are required to add 5% VAT to every food item they sell. No matter what type of food a restaurant serves—from fast food to Arabic cuisine—they must charge consumers VAT.
VAT Eligibility
Any company with yearly revenue of more than AED 375,000 is eligible for VAT. A restaurant is required to pay taxes if it collects AED 1,000 or more per day overall.
Since restaurants are notorious for having poor bookkeeping practices, the establishments should be prepared now that VAT is in effect. To qualify for VAT, they must register with the FTA.
Tax Invoice
Restaurants must abide by a set of regulations and use separate VAT invoices. Every company must immediately update their invoicing software with the template FTA has previously provided.
The invoice should include a detailed breakdown of what customers ordered and the 5% tax. If a restaurant cannot send a standard invoice, they can use another straightforward billing method. In any case, the format must comply with the requirements of the government.
Revision of Prices
Now that the FTA has implemented the VAT system, businesses must inform their clients of this. Restaurants must update their menu prices to charge clients the appropriate VAT amount.
There are two ways to inform clients that their taxes have increased.
1. Prices added in Menu:
The owners of the restaurants should include the VAT in the item’s original price and indicate the revised price on the Menu. The fast-food restaurants and other typical eateries should implement this strategy.
2. Mentioning VAT Extra in Footnote :
Fine dining venues can simply print a brief footnote at the end of the Menu informing guests that there will be an additional 5 percent VAT fee.
This makes it simple to explain the new cost to customers. No matter which choice you select, it is crucial to update your item prices and, if possible, keep pricing in check because it is already challenging for restaurant owners to sell food items for a reasonable price. You must speak with reputable VAT advisors in Dubai so they can assist you with filing.
VAT Implementation in UAE and Its Impact on the Restaurant
We are a Federal Tax Authority-certified VAT consulting firm with offices in Dubai, United Arab Emirates (FTA). The first step to compliance is understanding the tax’s concept, and in Dubai, UAE, we offer support for VAT registration, VAT return filing, VAT auditing, and VAT advisory services. Ensure that your company is VAT-ready with the aid of Finsouls, the reputable VAT experts in Dubai at the moment.
Expert VAT Consultancy for Your Businesses in the UAE
The leading accounting and consulting organisation in Dubai are Finsouls Accounting and Bookkeeping Services LLC. Provide complete VAT consulting with VAT Experts and solutions for filing VAT returns to businesses around the UAE. We assist businesses in being aware of the financial consequences of taxes on goods and services and the steps they may take to lessen those effects. We can advise firms on the best ways to comply with tax laws, get their VAT refunds, adopt new accounting practices, and make the necessary adjustments to databases and accounting systems.