VAT Registration UAE is a prime obligation under the Emirati VAT law, no matter what kind or size of business you own. In order to get official recognition from the government, all businesses, small, medium, or large, have to register themselves with the Federal Tax Authority (FTA) under the UAE VAT law. The registration eligibility will, however, depend on the revenue generated by the company in a considerable time.
Value Added Tax (VAT) and Importance of VAT Registration UAE
The Value Added Tax (VAT) is basically an indirect tax imposed on sold products and services and collected from the end recipients. Since the consumers are the end users of the taxable supplies, VAT is also referred to as Consumption Tax. The money then collected from the consumers is returned to the government for public welfare practices.
According to experts, the introduction of VAT in the UAE is believed to bring long-term benefits to the economy as well as business owners. In addition, there are various other significant reasons for considering VAT Registration UAE, such as –
- It enhances the business profile
- Companies can avoid unnecessary penalties
- It allows businesses to claim VAT refunds
- It expands the possibilities for the business in the market.
Types of VAT Registration in UAE
Basically, there are two types of VAT registration UAE that businesses can opt for –
Mandatory Registration
If the taxable supplies and import value of the business over the previous 12 months exceeds or is anticipated to exceed the threshold of AED 3,75,000, then it must mandatorily register for VAT. Nevertheless, this threshold is not applicable to foreign businesses.
Voluntary Registration
On the other hand, businesses can opt for voluntary VAT registration in UAE if they do not meet the mandatory registration criteria. This means that their taxable supplies and import value over the previous 12 months surpasses or is anticipated to surpass the voluntary registration threshold of AED 1,87,500.
How to calculate the VAT Registration threshold?
According to the Federal Decree-Law No. (8) of 2017 on Value Added Tax, businesses must consider the following details to determine whether they have exceeded the Mandatory Registration Threshold or the Voluntary Registration Threshold –
- Total value of taxable supplies
- The total value of goods and services received by the Person
- The value of the taxable supplies belonging to the concerned applicant if he has, wholly or partly, acquired a business from another person who made the supplies.
- The value of taxable supplies made by related parties under the cases stated in the Executive Regulation of the Law.
Additionally, the below sectors or categories of supplies are exempted from VAT –
- Financial services
- Residential properties
- Bare land
- Local passenger transport
- Exports
- Aircraft and sea transportation services
- Investments in precious materials
- Education and healthcare
Process of VAT Registration UAE
The process of VAT Registration in the UAE can be a bit tricky, and therefore, it would be judicious to hire a Tax Consultant in Dubai who is well-versed in all the formalities. UAE Expansion Tax will submit your VAT application and ensure that your business is successfully VAT-registered and all the steps are taken appropriately.
To initiate the registration process, you will have to fill out a form with the specific details –
- About the Applicant
- Details of the Applicant
- Banking Details
- Contact Details
- About VAT Registration
- Business Relationships
- Declaration
Once the application is submitted to the FTA, it will review whether all the requirements are duly met and further approve the application to issue a TRN.
Check the progress of your application –
- If the status shows ‘Drafted’: The form hasn’t been completed or submitted.
- If the status shows ‘Pending’: The form is either under review or withheld until additional information is received from the applicant.
- If the status shows ‘Suspended’: The form has been suspended.
- If the status shows ‘Rejected’: The FTA has rejected the form.
- If the status shows ‘Approved’: The form is approved by the FTA and the business is registered for VAT.
Once this process is over, the Ministry of Finance will issue a VAT certificate as an official confirmation that the business is VAT-registered under the VAT Law in the UAE.
The VAT certificate issued by the MoF will include the following particulars –
- VAT Registration Number
- Date of registration
- Issue Date
- Address of the Registered entity
- First VAT return period
- Due date of VAT return
- Tax period (Start date and end date)
According to the UAE VAT law, every entity that is eligible for VAT registration is mandated to submit their registration with the Federal Tax Authority on a fixed deadline. Any failure or negligence may lead to a fine of AED 20,000.
Documentation requisites
Businesses need to submit the below documents for VAT Registration Dubai and get the Tax Registration Number (TRN)
- Copy of valid Trade License
- Valid Passport copy and Emirates ID copy of the owners/shareholders/managers
- Contact Details of the company (P.O Box, building & area)
- Memorandum of Association (MOA), if applicable
- Contact details of the applicant (Contact Number, Designation, Email Address)
- Bank Details of the Company (Corporate account details including Account Name, Account Number, IBAN, Bank Name, Branch Name)
- Turnover declaration signed and stamped by the owner of the company (for the last 12 months) and printed on the company’s letterhead
- Signed and Stamped sales or purchase invoices
- Customs letter (if the business is dealing with the customs department)
All the above documents need to be presented before the Federal Tax Authority for inspection. FTA will then review all the submitted credentials and issue the Tax Registration Number (TRN) accordingly. UAE Expansion Tax consultants will assist you in this step and make sure all the documents and paperwork are handled correctly, without any mistakes and delays.
VAT Group Registration
Additionally, FTA has also introduced VAT group registration wherein two or more taxable entities can apply for Tax Registration as a single person. However, there are certain conditions to it –
- The applying entities shall have a Place of Establishment or Fixed Establishment in the region.
- The taxable persons shall be related parties.
- Individuals conducting business in a partnership shall control the others.
- The authorities will assess the relationship of the related parties on the basis of economic, financial, and regulatory practices and register them as a Tax Group as per the controls and Conditions specified by the Executive Regulation.
Is it possible to deregister for VAT?
Yes, if you ever need to, you can deregister for VAT in the UAE. However, this applies only to those businesses that have been registered for at least 12 months before applying for deregistration.
The conditions under which you can deregister are:-
- Your business is not generating taxable supplies anymore
- The value of the company’s taxable supplies falls below the voluntary threshold.
- Your company does not expect to cross the voluntary threshold within the next 30 days.
Get registered for VAT with UAE Expansion
UAE Expansion has been dealing with accounting and taxation services for businesses for years. Their experts are perceptive of the procedures and hence know the right decorum that needs to be followed for the VAT registration in UAE.
Apart from VAT registration and other taxation services, UAE Expansion also assists in all kinds of services related to business setup in Dubai and helps them grab maximum profits from the market. They recognize client needs and thus deliver a wide range of services tailored to their business requirements.
