VAT Registration in UAE

VAT Registration in UAE

For a long time UAE enjoyed an era of tax exemption, but the impact of the international market made it essential to introduce a tax system. Among other taxes, VAT was applied on the transaction of goods. This tax is a bit similar to sales tax, as both of them are indirect in nature. VAT is imposed on both services and goods throughout the supply chain, and this has increased the need for VAT registration in the UAE.

This tax is also imposed on imported goods and services to support the domestic providers. To comply with the new tax introduction, manufacturers and sellers have to register themselves for VAT. While this registration is mandatory for some providers, others register for it voluntarily. Some businesses are exempt from VAT and do not need any additional registration to conduct business.

How To Register for VAT in UAE

Registering for VAT is mandatory for some businesses, and the process of registration is very minimal and can be done online. The VAT registration in UAE is done via the website of the Federal Tax Authority (FTA). Any individual or company wishing to register for VAT needs to submit mandatory documents. Below is the list of documents that need to be submitted when registering for VAT in the UAE:

  • A copy of the trade license
  • Certification of incorporation
  • Memorandum of Association
  • Passport copy and Emirates ID of all the shareholders, authorized signatory, and managers.
  • Turnover in the last 12 months along with proof
  • Expenses of the last 12 months along with valid proof
  • Turnover is expected in the next 30 days and the proof of this expected turnover (also the copy of the contract if available).
  • Whether the company has transactions with other GCC countries
  • Contact information of all the authorized signatories
  • Proof of authorized signatory (like MOA POA) if their name is included in the MOA.
  • Expenses expected in the next 30 days.
  • Custom registration number with an exciting bill of entry.
  • Details of partners, directors, shareholders - if the same people are partners, directors, or shareholders in any other company.
  • Bank details with all the essential information like (branch name, account number, swift code, bank IBAN number, etc.)
  • Supporting documents for customs registration in each emirate.

Mandatory VAT Registration

It is mandatory to register for VAT in some businesses. Your business is mandated to register if:

  • A person or business that has made sales or supplies of more than AED 375,000 in the period of 12 months is required to apply for VAT registration in UAE.
  • If a person or business estimates that their sales or supplies will exceed AED 375,000 in the coming 30 days, they must register for VAT as well.
  • A person or business that does not have a residence in the UAE, or is a Non-resident must register for VAT if they supply in the UAE regardless of their turnover. The person or business is required to register for VAT if no one else is paying VAT on their behalf against the supplies or sales.

Voluntary VAT Registration

All the businesses that are not required to register for VAT in UAE have the option to register voluntarily. You can register for VAT if you:

  • If the supplies or sales of the individual or business are at least AED 187,500 in a period of 12 months, which is 50% of the mandatory sum for registration.
  • In case a person estimates that their supplies and sales will exceed AED 187,500 (but will remain less than 375,000) in the next 30 days can voluntarily apply for VAT registration in UAE.
  • A person can also opt for voluntary registration if their expense exceeds AED 187,500 in a 12 month period.
  • In case, a person who estimates that their expense will exceed 187,500 in the next 30 days can also apply to register for VAT in UAE.

VAT Registration Exemption

The businesses that have sales less than the threshold of AED 187,500 are not allowed to register for VAT. To voluntarily register, you will need sales of more than 187,500. Also, FTA specifies that if 100% of the supplies are zero-rated under the law, the companies cannot apply to register for VAT.

Enlist The Help of Professional for VAT registration in UAE

If you are unsure of how to register for VAT in UAE, you should enlist the help of secure support. A registered accountant and tax agency can help you submit a correct application and make the process more streamlined for you. A trusted agency will ensure full compliance with the FTA and the standards laid down by it. They can help you avert the most common issue faced by many individuals and companies during the process of registration. The registration process consists of seven steps, and several crucial details need to be filled in. With the right agency, you can ensure accuracy and persistence during the whole process of VAT registration in the UAE.

WHO

Companies and individuals doing businesses in the UAE

WHEN

MANDATORY if annual turnover is more than AED 375,000 VOLUNTARY if annual turnover is less than AED 375,000 but more than AED 187,500.

WHERE

Federal Tax Authority’s online portal https://eservices.tax.gov.ae/en-us/

HOW

Decide: Register as a TAX GROUP or STANDALONE?

Keep following relevant / applicable soft copy of the documents ready to upload

  • Create account in FTA
  • Trade license
  • Memorandum of association
  • Certificate of incorporation
  • Articles of association
  • Authorized signatory’s Passport, Emirates ID
  • Power of attorney
  • Description of business activities
  • Details of Bank Account
  • Turnover for the last 12 months with supporting documents
  • Expected turnover in next 30 days
  • Estimated value of imports for one year from each GCC
  • Estimated value of exports for one year to each GCC
  • Whether you expect to deal with GCC suppliers or customers
  • Supporting documents for customs registration in each Emirates

Consequences On non-registering

If you fail to register for VAT on time, a late registration administrative penalty of 20,000 AED will apply.

For more information,please contact UAE Federal Tax AuthorityClick here

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