VAT Registration in UAE
UAE adopted VAT on 1st January 2018. On most goods and services, 5% VAT is charged, and some of the goods as well as services are subject to zero-rated tax. A few goods and services are exempt from VAT. The VAT registered businesses collect VAT from customers, which reaches the government.
Implementation of Tax registration in the UAE also brought about the compliance check. Companies need to align their businesses to ensure error-free, updated books of accounts and organised tax-related documents.
Post VAT registration, you need to provide details about input VAT and output throughout the fiscal year. If the output VAT exceeds input VAT, a VAT registered business must pay the balance to the FTA.
Moreover, these VAT-related formalities can be complicated and ensuring compliance can be time-consuming. You need a reputed and resourceful tax consulting firm with in-depth knowledge of all VAT aspects.
Contact us for the VAT registration services and see what we can do for you.
Which Businesses Require VAT Registration UAE?
Before considering VAT registration in UAE, it is necessary to find out whether your business requires VAT registration or not.
A business may require VAT registration in the following scenarios where Business:
- That require mandatory VAT registration
- That can conduct Voluntary VAT Registration
- Exempt from VAT Registration
VAT Registration Limit in UAE
In the case of Mandatory VAT registration, businesses have no option but to register for VAT. What are the criteria for mandatory VAT registration? VAT registration is compulsory if-
- The taxable supplies as well as imports have exceeded 375,000 in the last 12 months.
- The total value of supplies & imports is expected to exceed AED 375,000 in the next 12 months.
VAT registration is voluntary for those businesses whose taxable expenses/value of supplies exceeds AED 187,500.
If your business’s annual turnover of taxable supplies is less than AED 187,500, you do not need to register for VAT. Suppose your business does not have a place of residence in the UAE. In that case, taxation will become compulsory, regardless of the registration threshold.
With voluntary registration, there is no compulsion to register. Still, it is an excellent opportunity for startups to opt for VAT registration.
Even though a company’s value of supplies or turnover may be less than the limits mentioned earlier, there is a strong possibility that it may have incurred significant expenses during business incorporation or the initial stages of business.
Hence, tax expenses are a parameter to determine if the company is eligible for voluntary registration. 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) is responsible for managing and collecting federal taxes and fines and applying tax-related procedures in the UAE.
It also maintains a UAE VAT Registration portal to facilitate online UAE VAT registration. The link for the same is below.
Accordingly, one must 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 companies to amend UAE VAT registration and apply for VAT deregistration. While filling out the VAT Registration Form, ensure that you submit accurate information.
One can also carry out VAT verification with his FTA UAE login. Go through the link below to receive detailed information on carrying out TRN (Tax Registration Number) verification in the UAE. (Link below)
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Documents required for VAT Registration
To complete the registration process, you must submit some documents and paperwork to the FTA. The list of necessary documents is mentioned below.
FTA VAT registration in Dubai or any other emirate requires a set of documents while conducting VAT registration.
- A scanned copy of the 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, you must present all the trade licenses.
- 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 UAE’s customs department, it is mandatory to add the scanned copy of the Customs Number.
The documentation process for VAT registration may seem complicated. Still, if you consult a reputable organization providing VAT registration services in the UAE, the entire process will be smooth. NR Doshi and partners clearly understand the VAT Law in UAE and VAT-related procedures like VAT auditing, VAT accounting, VAT refund, VAT return filing, VAT computation, etc.
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 certainly have a business in the UAE and be legal individuals under common control. This kind of VAT registration in the UAE is also known as tax group registration.
Further, a representative member of the group files a consolidated VAT return covering all the group’s activities. Hence, it simplifies the accounting and compliance requirements. However, all group members remain jointly and severally liable for VAT debts. Further, all the supplies made within the tax group do not attract VAT.
VAT Registration amendments
Suppose future circumstances call for amendments in VAT registration. In that case, they must be informed to FTA in 20 days (about three weeks) from such circumstances. One would be able to make changes to the FTA portal itself.
Still, some of the changes, like the applicant’s personal information, contact details, banking details, and business relationships, require the FTA’s approval. VAT registration in the UAE changes depending on the applicant’s business activities, GCC activities section, customer registration information section, and other factors. You can quickly make such changes without seeking approval from the FTA.
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One can de-register as a Taxable Person if he is required or eligible to de-register. One can cancel his VAT registration on the FTA portal.
Penalties for failure to register for VAT in UAE
Suppose a business (that falls under the mandatory VAT registration category) fails to register for VAT registration in the UAE under the period specified by the authorities. In that case, it must pay the penalty amounting to AED 20,000.
Why Choose N R Doshi and Partners?
N R Doshi and Partners has earned an excellent reputation in VAT Law in UAE because of their services as well as their determination to provide clients with the best VAT Consultancy services.
Ever since there were talks of VAT implementation, we analyzed the situation and prepared for it. At present, we keep a close eye on VAT-related laws, amendments, and updates in the UAE. We continuously share information with our clients regarding VAT Return filing, VAT Audit, VAT Refund Dubai, and VAT Services in Dubai, UAE, allowing them to take the necessary steps without failing compliance.
Of course, we are indeed there to help if they need further assistance or expert opinion.
- We remain attentive to the government amendments and check if it affects VAT. If the amendment is related to VAT, we provide our clients with relevant information & advise them on how to ensure compliance with the new law. We also conduct a financial analysis of new developments and their impact while suggesting necessary measures to our clients.
- We have an excellent team that consists of experienced VAT consultants. Our team members have extensive experience in various industries. Therefore, their knowledge is exhaustive, which is our greatest strength.
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FAQs: VAT Registration Service
What is Value Added Tax (VAT)?
Value Added Tax (VAT) is a form of indirect tax. Businesses collect VAT at each stage in the supply chain, as well as 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 as well as expenses. Further, non-registration amounts to a violation of the law, and it attracts penalties.
What is a Taxable Person?
A Taxable Person carries out a specific economic activity as well as 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 consideration while conducting business in the UAE, and it does not include exempt supply. Moreover, 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, it would help if you went for voluntary VAT registration in UAE. A person can voluntarily register for VAT if his turnover crosses AED 187,500. Further, anyone expecting taxable turnover to cross AED 375,000 in the next 30 days must register for VAT. It is significantly important to note 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. It would be best if you calculated 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 certainly got rejected. Such as annual turnover is less than the threshold value, a mismatch in the information, etc. Therefore, we advise you to contact 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 as well as services
- It can claim the input tax credit for VAT paid on business-related goods as well as services. VAT payment on entertainment, personal, and employee-related expenses cannot be reclaimed
- It must maintain proper records for the government to check.
- Payment of VAT to the government
- It must file the VAT return periodically
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