VAT registration in UAE
Many countries have adopted the VAT system by now. It is an indirect tax that is collected on the goods and services consumed by a customer. The obligation of VAT collection lies on the business, and it has to remit the tax so collected to the Government. However, the first step is to do VAT registration.
UAE adopted VAT on 1st January 2018. On most of the goods and services, 5% VAT is charged, and some of the goods and services are subject to zero-rated tax. A few goods and services are exempt from VAT.
With the Tax registration in UAE, the compliance check also came into existence. The companies need to align their businesses in such a way that they always have error-free and updated books of accounts and organized tax-related documents. Check out 11 things to know about VAT in UAE
Therefore, you need the support of a consulting firm that has in-depth knowledge regarding various aspects of VAT. You can contact us for the VAT registration services or even check out our other VAT consulting services in UAE.
Which Businesses require VAT Registration?
Before registering for VAT in UAE, it is necessary to find out whether your business requires VAT registration or not.
A business can fall in any one of the following categories for the purpose of VAT Registration:
- Businesses which need to do Mandatory VAT Registration
- Businesses which have the option to conduct Voluntary VAT Registration
- Businesses which are Exempted from VAT Registration
VAT Registration limit in UAE
In the case of Mandatory VAT registration, businesses have no option but to register for VAT. Such businesses have an annual turnover of taxable supplies of or above AED 375,000.
The second category, as per the VAT Registration threshold in UAE, has the option of whether it wants to register for VAT or not. Such businesses have an annual turnover of taxable supplies between AED 187,500 and AED 375,000
If your business’s annual turnover of taxable supplies is lesser than AED 187,500, you don’t need to register for VAT.
While calculating the value of taxable supplies and imports, one needs to exclude the value of exempt supplies.
Applying for VAT Registration in UAE
The Federal Tax Authority (FTA) looks after managing and collecting federal taxes, fines, and applying tax-related procedures in the UAE. There is a UAE VAT Registration portal https://eservices.tax.gov.ae/ maintained by Federal Tax Authority (FTA) for facilitating UAE VAT registration online.
Accordingly, one has to create an e-service account on the FTA portal and follow the steps for completing the Tax Registration form. The same FTA UAE Login credentials enable one to amend VAT registration and also apply for VAT deregistration. While filling up the Value Added Tax Registration Form, ensure that you submit the accurate information.
One can also carry out VAT verification with his FTA UAE login. Read through https://nrdoshi.ae/trn-verification-steps-to-check-trn-validity/ to know complete procedures to carry out TRN verification in UAE.
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Documents required for VAT Registration
Most of the companies have already registered for VAT. If you register for VAT in UAE now, it could be because of the increment in the annual turnover or you starting a new business or because of the addition of new products and services on which VAT is implied.
FTA VAT registration in Dubai or any other emirate requires a set of documents while conducting VAT registration.
- A scanned copy of Trade License
- Certification of Incorporation
- Article of Association or Partnership Agreement
- If you do not have any of the above documents, it is necessary to show documents that prove your ownership
- If you own multiple trade licenses under the name of a single entity, all the trade licenses are required to be presented
- Besides these details, a passport copy of the CEO or equivalent is mandatory.
- If the CEO or equivalent is a UAE resident, his Emirates ID copy is required.
- You also need to add proof of your annual turnover
- If you are registered with the customs department of the UAE, it is mandatory to add the scanned copy of the Customs Number
- How to register for VAT in UAE
As you can see, there are many documents involved in the VAT registration process. It may appear complicated, but if a trustworthy VAT consulting firm in UAE performs your VAT registration, you won’t face any issue. The Government has introduced a well-defined process to obtain a VAT number, and N R Doshi and Partners is thoroughly familiar to its every segment.
VAT Group Registration in UAE
Businesses sharing common economic, financial, and regulatory aspects may register as a VAT group. Such common aspects could be in the form of legal status, shareholding, or voting rights. They should have a business in the UAE and should be legal persons under common control. Such VAT registration in UAE is also known as a tax group registration.
A representative member of the group files a consolidated VAT return covering all the activities of the group, and hence it simplifies the accounting and compliance requirements. However, all members of the group remain jointly and severally liable for VAT debts. Further, all the supplies made within the tax group do not attract VAT.
VAT Registration amendments
If subsequent circumstances necessitate amendments in VAT registration, then they must be informed to FTA in 20 days from the occurrence of such circumstances. One would be able to make changes on the FTA portal itself. Still, some of the changes like details of the applicant, contact details, banking details of the applicant, business relationships, among others, require approval from FTA. The thing about VAT Registration in UAE is, changes like the business activities of the applicant, GCC activities section, customer registration information section can be quickly made without seeking approval from the FTA.
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One can deregister as a Taxable Person if he is required or eligible to deregister. One can cancel his VAT registration on the FTA portal.
Penalties for failure to register for VAT in UAE
If a business that is required to go for VAT Registration in UAE fails to register for VAT in UAE within the timeframe specified by the UAE tax law, it will attract a penalty of AED 20,000.
Why Choose N R Doshi and Partners?
N R Doshi and Partners has earned an excellent reputation because of our services and determination to provide the client with the best results. We are FTA registered tax agents, which makes our competency unquestionable. The UAE registered tax agents are aware of the laws and best practices related to VAT. Therefore, your business will have a minimal chance of having any compliance issues.
We are tracking VAT related information since the idea of VAT implementation was introduced. Even now, we keep a close eye on the updates related to VAT. We continuously share the information with our clients, which allows them to take the necessary steps without failing compliance.
In addition to VAT registration, we also offer a complete package which includes all the VAT related service. We are a one-stop solution to all your financial requirements. You can also reach us for accounting, auditing, and advisory services.
- We remain attentive towards the government amendments and check if it affects VAT in any way. If the amendment is related to VAT, we provide our clients with the information that what they should do to be compliant with the new law. We also provide them the financial analysis describing the impact.
- We have an excellent team which consists of experienced VAT consultants. Our team members have worked with companies belonging to different sectors. Therefore, their knowledge is incomparable and our biggest strength.
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FAQs: VAT Registration Service
What is Value Added Tax (VAT)?
Value Added Tax (VAT) is a kind of indirect tax. Businesses collect VAT at each stage in the supply chain, and it is the customer who bears the tax.
Why should a business register for VAT?
A VAT registered business can take benefit of input VAT paid on purchases and expenses. Further, non-registration amounts to a violation of the law, and it attracts penalties.
What is a Taxable Person?
A Taxable Person is anyone who carries out a specific economic activity and is registered under the VAT law in UAE or required to be registered under the law.
What are taxable supplies?
Taxable supplies include a supply of goods and services for a consideration in the course of conducting business in the UAE, and it does not include exempt supply. Taxable supplies include standard-rated supplies @ 5%, zero-rated supplies @ 0%, reverse charged services received, and imported goods.
My turnover of taxable supplies is less than AED 300,000, but I am expecting it to cross AED 375,000 in the current financial year. Do I have to register for VAT?
Yes, you should go for voluntary VAT registration in UAE. A person can voluntarily register for VAT if his turnover crosses AED 187,500. Further, anyone who is expecting taxable turnover to cross AED 375,000 in the next 30 days is required by the law to register for VAT. It is important to note here that VAT registration is mandatory if the taxable turnover exceeds AED 375,000.
Do zero-rated supplies count towards the AED 375,000 VAT threshold?
Yes, zero-rated supplies do count towards AED 375,000 VAT threshold. You have to calculate your taxable turnover accordingly.
Is it necessary to add information of all the business partners of an LLC Company?
Yes, while providing the applicant details, you need to add the information of all LLC Company directors.
What should I do if my VAT registration application gets rejected?
There could be several reasons why your VAT registration application got rejected, such as annual turnover is lesser than the threshold value, mismatch in the information, etc. Therefore, we suggest contacting a reliable tax agent who can guide you through the process.
What are the obligations of a VAT Registered business or taxable person in UAE?
- A VAT-registered business must charge VAT at the applicable rate on taxable goods and services.
- It can claim the input tax credit for VAT paid on business-related goods and services. VAT paid on entertainment, personal, and employee-related expenses can not be reclaimed.
- It must maintain proper records for the Government to check.
- It must pay VAT to the Government
- It has to file the VAT return periodically
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