UAE is turning out to be the hub for rising startups. According to a report, the annual GDP of the UAE has a lot to do with the startups in the region. About 47 % of the yearly GDP of UAE is credited to the revenues from startups!
If you’re a tech startup in the UAE, you're probably struggling to get your functions uniform and your products and services compliant with the industry standards. Amid all chaos, you may also be worried about registering your startup for VAT.
Moreover, there's always confusion about whether you should get your startup VAT registered. Startups are already too limited on capital and always ensuring the core functions are catered to. The best option is to consult experts before you decide. Opt for the services of the best VAT consultancy in Dubai to help you out with your VAT registration.
Pros And Cons Of VAT Registration
Startups are struggling with ventures that are focused on strengthening their names in the eyes of consumers. With their complete energy focused on this one task, it leaves little space for other activities. However, before you choose to ignore the importance of VAT for your business, read below to know about the pros and cons of VAT registration!
You Can Avoid Financial Penalties!
It’s important to keep a close eye on your turnover figure to ensure they don’t go over the VAT registration threshold. In the case of nonchalance or not taking it too seriously, your turnover can bypass the VAT registration threshold and result in heavy fines for your business.
If you are new in the business, that’s not something you would want! It can be damaging to both your capital and your reputation!
Enhance Your Business Profile!
Since you’re a startup, it is going to be a little hard for you to compete with much larger firms than yourself! But if you want to be a part of the rat race, register for VAT voluntarily and make your business appear bigger than it already is.
Encourage Business Dealings
Suppliers and vendors may feel a little hesitant to do business with you if you’re not a VAT registered company. When you register yourself voluntarily, it opens up new avenues for business even with the best and most reputable suppliers, and vendors.
You're Legible For Refunds
If you registered voluntarily for VAT, your startup will have the ability to claim VAT on services and goods that you purchased for your business.
You’re Legible For Past VAT Too!
Since you’re a startup, it may take you years, to reach your VAT threshold. However, in case you’ve maintained a proper VAT record and invoices, you can still reclaim VAT.
Con: Prepare Documentation
Registering for VAT adds another responsibility to your business functions. Paperwork and administration remain an unavoidable consequence of VAT registration. It is important to maintain all records, invoices and also file returns every quarter.
Con: Hard To Balance
In case your tech startup generates larger VAT from the services and goods you sell, compared to the services and goods brought from other businesses it could cost your company a large bill form the revenue and customs department of the UAE.
Take Away
When it comes to startups, it's essential to stay up to date with all VAT policies and to understand the pros and cons of VAT registration. Despite its few disadvantages, VAT registrations can be extremely beneficial for startups. What's more, is that the best VAT consultants can help you throughout the process and ensure you're up to date with the Emirati VAT relevant policies. Opt for the best VAT consultancy in the UAE, and you're all set to become a prosperous business!