How to calculate Dubai service charges
Dubai Service Charges
The Dubai service Charges are paid towards the maintenance of the property and amenities. These charges are paid to the Dubai Land Department. The maintenance charge is based on the RERA service and maintenance index. These fees are charged on a square foot basis and can range anywhere from AED 3 to AED 30 per month or more depending upon the area / Dubai community.
Dubai service charges apply to each property owner who owns a property in Dubai. The service charge is calculated on a per square foot basis, with the amount varying between project developments depending on factors such as which floor the apartment is located on, whether it has a terrace or balcony, etc.
Property buyers must pay additional fees for buying property in Dubai in the form of this Dubai service charges. However, there are many fees aside from the property service charges, such as property transfer and registration fees, agency fees, security deposit, insurance fees, and Dubai electricity and water authority fees which also need to be considered while planning to buy an apartment in Dubai.
Apart from these, Developers also charge something known as a Sinking Fund. The sinking fund for properties in Dubai acts as reserve funds which are set aside for any major repairs or maintenance that may be required in the future. This Sinking fund is also payable by the homeowner and will cover items such as repair, renovation, or replacement of the roof, external cladding, fire alarms, safety systems, A/C systems in the common areas, windows, balconies, parking areas, elevators, and so on. Other service charges that add-on to the total cost includes utilities for chiller-free and district cooling units if available within the Community.
What is a Property Service Charge?
A property service charge covers the costs of management, maintenance, operation, and repair of a property. The Dubai property service charges will be collected by the property owner or by any licenced property management company approved by the owner to act on their behalf.
As per Law Number 6 of 2019 Concerning Ownership of Jointly-Owned Property in Dubai, the property owners are liable to pay the service charges. An owner’s share of the service charge is calculated based on the area of the owner’s unit to the total area of the shared property. To ease this process, DLD initiated the Mollak System; an online portal to monitor the service charges of jointly-owned properties.
Apart from the service charges on property, the property owner must set aside a ‘sinking fund’. This fund acts as a reserve fund set aside to counteract fluctuations in service charges. The sinking fund is also used for costly maintenance work, renovation, external cladding, maintenance of safety systems, air conditioning systems etc.
VAT for Restaurants
8A growing variety of foreign and local concepts in the restaurant industry have raised the level of competition in the Dubai restaurant sector. Ethnicities in food cultures bring together the hands over tastes and a wide variety of services. VAT is an indirect tax charged on goods and services from the point of origin to the point of consumption. VAT is generally applicable to restaurant or food bills. Restaurant services are required to charge VAT at 5% to its customers. As per the law, VAT is charged on all kinds of food services including Arabic, Continental, Chinese and other restaurants in. A business register for VAT if their annual turnover exceeds the threshold of AED 375,000 as per the current year. There exists an option for voluntary registration if there is a threshold of AED 187,500. The government of UAE and the Federal Tax Authority (FTA) defined this process of the threshold for registration and reporting of VAT.
* Restaurants are required to issue VAT invoices to customers when goods and services provided are more than AED 100,00.
* Restaurants can claim input tax on the expenses incurred for business purposes. The instances are the purchase of food items, rental expenses, delivery vehicles, equipment used in the kitchen for cooking, furniture and fixtures, stationery, office equipment.
* Restaurants must maintain all the business records and documents for a period of 5 years.
VAT impact on Restaurants in the UAE
Introduction of VAT in UAE had made a huge impact on the restaurant sector it includes:
- Compulsory financial record maintenance
- Implementation of VAT software in the organization to maintain uniform recordings
- Dynamic consumers spending pattern
- VAT to be paid on the imported raw materials in the business chain
Different Tax Patterns
- Purchases of essential and staple food items are Zero-rated.
- Outsourced manpower in the restaurant industry can be claimed as an input tax credit.
- On food items mentioned in the list of Goods approved by the Financial and Economic Cooperation Committee will be zero-rated.
- VAT on food and beverages is 5%
- Restaurant and catering services are subjected to 5% VAT
Display of Menu Price
Restaurants are given two options of pricing in their menu. It includes:
- VAT inclusive to the prices
- VAT exclusive by giving a footnote of 5% standard rate
Tax Assessment and Penalties
In non-compliance, FTA issues a tax assessment with the tax payable within five business days of its issuance.
- Administrative Penalties
- Penalties in case of tax evasions discovered by the court
- FTA conducts VAT audits with five days’ notice if fraud is suspected
How to Calculate VAT in UAE?
On most of the products, 5% VAT is implemented. However, there are few products on which 0% VAT is implemented, and a few products are exempted from VAT. Therefore, while using VAT calculator UAE, it is important to add the correct VAT percentage.
For the products which are exempted or have 0% VAT, you don’t need to use the UAE VAT calculator as the VAT amount is Zero. However, one must use our online VAT calculator in Dubai when 5% VAT is applicable to goods and services
How does AHG help you?
AHG VAT consultancy services in Dubai and UAE are tailor-made to meet the unique requirements of the customers. At ِAHG, we conduct an in-depth analysis to understand your business complexities extending from your services to accounting, taxation, auditing, and VAT services. Our VAT specialists having relevant industry-specific experience in taxation in compliance with international standards can help you successfully complete all your VAT activities without any fail.
AHG VAT experts on restaurant sectors help you with:
- VAT Registration & tax filing process
- VAT planning
- Track books of records maintenance
- Maintain financials
- Train you on VAT laws in UAE
- Interpret and classify tax groups
- Process with accurate and quick tax filing
- Update you with FTA’s new legislation and rules
- Provide unique advice on financial and legal issues
- Provide advice on VAT rates
Since AHG ’s an Approved Tax Agency in the FTA of UAE and one of the leading Tax Agencies who is specialized in the Excise Tax, AHG’s Services range from Tax Registration, Tax Filing, Tax consultancy, Warehouse Keepers and Designated Zones Registration, Stock and Duty Calculation, Advice on Stockpilers, Tax Agent, Digital Tax Stamps Filing Disputes, Representation in front of the FTA of UAE