VAT Impact on Restaurants in UAE

The Impact of VAT on UAE Restaurants

VAT stands for Value Added Tax, which was recently implemented in the UAE. Businesses charge this value-added tax at any stage of their supply chain. Restaurants in the UAE are required to charge a 5% VAT on any food item they sell, regardless of their cuisine. Whatever type of food a restaurant serves, from Arabic cuisine to fast food, they must charge VAT to their customers.

VAT Ineligibility

Any business with an annual turnover of more than AED 375,000 is subject to VAT. A restaurant is required to pay taxes if it receives AED 1,000 or more per day in total.

Restaurants have a bad reputation for bad bookkeeping, but now that VAT has been introduced, restaurateurs should be in good shape. To be eligible for VAT, they must first register with the FTA.

Invoice for taxation

The VAT invoices are different, and restaurants are required to obey a set of guidelines. The template has already been issued by FTA, and all businesses must now upgrade their invoicing software to use it.

The invoice should provide a detailed breakdown of the goods that customers purchased, as well as the 5% charge. If a restaurant is unable to issue a standard invoice, they may use another convenient method of billing. In either case, the format must meet the requirements of the government.

Price Adjustment

Now that the FTA has implemented a VAT scheme, it is important for businesses to inform their customers. Restaurants must revise their rates in order to raise the VAT sum from customers.

There are two methods for informing consumers that they will be paying more tax.

  1. Prices in the Menu: The VAT should be added to the original price of an item, and the revised price should be noted in the menu. This scheme should be followed by fast-food restaurants and other regular eateries.
  1. Printing a small footnote at the end of the menu stating that customers will be charged an additional 5% VAT : Fine dining restaurants should simply print a small footnote at the end of the menu stating that customers will be charged an additional 5% VAT. This makes it easy to communicate the new pricing to consumers. Whatever choice you select, it’s important to review all of your prices and, if possible, hold them in check, as it’s already difficult for restaurateurs to sell food at a low price. It is critical that you contact reputable VAT consultants in Dubai who can assist you with filing.

The Effect of VAT Implementation in the UAE on Restaurants

We are licenced and registered VAT consultants in Dubai, UAE, with Federal Tax Authority-certified VAT experts (FTA). Understanding the tax definition is the first step toward enforcement, and we provide assistance with VAT registration, VAT return filing, VAT auditing, and VAT advisory services in Dubai, UAE. With the support of Simply Finance, the most trusted VAT consultants in Dubai today, make sure your company is VAT-ready.


VAT Consultancy in the UAE for all types of businesses

Simply Finance Accounting and Bookkeeping Services LLC is a Dubai-based accounting and consulting company that leads the industry. VAT Experts provide detailed VAT consultancy and VAT return filing solutions to businesses around the UAE. We assist companies in understanding the financial impact of taxes on goods and services, as well as the steps they may take to reduce those impacts. We will assist companies with tax enforcement, vat refunds, and adoption, as well as the required upgrades to accounting systems and databases.