For every business to be successful, it is important to register VAT. This is because a company that is not tax compliant tend to fall into tax traps and might get into problems with tax authorities. So, we help you with all aspects of VAT and sales tax – from tax consultancy to complex solutions.
In the United Arab Emirates, value added tax, or VAT, is levied on the acquisition or sale of taxable goods and services. The country’s current VAT rate is 5% (five percent). VAT-registered businesses are allowed to claim VAT paid on expenses expended on goods or services for their firm. These businesses collect VAT on behalf of the UAE Federal Tax Authority (FTA). Even though the government has exempted food, healthcare, and education from VAT, the cost of living has somewhat increased for UAE residents. But it’s important to remember that the VAT won’t put a lot of financial stress on people, allowing them to continue living well and getting better.
So, to comply with the VAT and other related legal obligations, businesses must make changes in their existing processes. Additionally, they must make sure that their records and finances are properly maintained in compliance with the new VAT laws that the government put into force on January 1, 2018.
VAT Registration Process
- Trade License
According to the Federal Tax Authority, a business in the United Arab Emirates that imports or supplies goods and services subject to tax and has an annual revenue of more than AED 375,000 is required to register for VAT. In accordance with the Free Trade Agreement, it is mandatory for all firms to document their financial activities. In addition, they must comply with VAT registration requirements and update their ledgers on time to avoid penalties.
To complete the VAT registration in UAE, businesses can avail the benefit of the FTA website. Businesses may visit www.tax.gov.ae and select the e-service portal. Once they click on the portal, businesses need to sign up and create an account. After the email has been verified, you can login and register for the business.
Businesses are recommended by the FTA to complete the application form carefully and with precise information. The entire registration process requires scanned documents, such as the manager’s or owner’s trade/business license, passport, or Emirates ID. If the signature is not the manager, they must also produce their passport or Emirates ID as proof of authorization, along with any supporting documentation such as the power of attorney and articles of organization that have been notarized.
As the process can be daunting for business owners, UAECompanysetup.org is always ready to lend out a helping hand to ensure you are properly registered and compliant with the VAT laws.
VAT Registration Requirements
A few documents are needed to register for VAT in the United Arab Emirates. When registering, the organization’s nature is important. The following documents are required for a businessman seeking alone for a VAT certificate –
- A signed request letter from the applicant
- A permit of residency for applicant
- A copy of applicant’s passport
The following criteria must be met in order for businessmen to register as authorities –
- Application letter with copy of the Act of Incorporation and authorized signatory
- Copy of the decree
The following documents must be submitted in order for a Dubai-based firm to register for VAT –
- copy of the trading license
- An application letter signed by the company’s authorities
Types of VAT Registration
The UAE government has made it very clear that not all businesses must register for VAT; instead, registration requirements are based on a company’s imports and revenues. The law establishes the threshold for both mandatory and optional registration, thereby relieving small businesses of the burden of preparing the necessary paperwork for VAT Registration UAE. The same holds true for certain goods and services that are legally exempt from value-added tax. Businesses that supply materials and services that are defined by law are excluded from the value-added tax provision.
There are two types of VAT registration –
Mandatory Registration | Optional Registration |
This happens when the company’s foreign imports and revenue are above the obligatory registration limit of AED 375,000, which is the VAT registration threshold. Within 30 days after the date of obligation, the company’s legal representative—who may also be its tax agent—submits a registration application to the Federal Tax Authority. The Authority may register the firm lawfully from the day the duty arose and impose the corresponding sanctions resulting from the legal representative’s failure to comply with the above-mentioned time frame. Non-resident companies operating in the United Arab Emirates that engage in supply chain activities are liable to pay Value Added Tax (VAT) as per the federal decree law. This is the case regardless of whether the company notifies the Authority of its registration obligation or not. The company has the option to register for taxes at an earlier date. to establish the duty in the event that the Authority and the business reach a consensus on this. | The authority registers the firm for taxation on the first day of the month following the date of application submission if the company’s revenue and imports from outside surpass the legally set optional registration limit of AED 187,500. Another date that is decided upon between the Authority and the company’s legal representative may also be used for registration. The company may file an application for tax registration accompanied by proof if it anticipates that within the next thirty days, its foreign imports and revenues will surpass the optional registration limit. |
How Can We Help You?
As the leading business consultant, we are well aware of every business model. We offer our services to all over the UAE. We understand how important it is to register VAT – so if you are looking for VAT registration services in UAE – contact UAECompanysetup.org, as we have a team of professionals having experience of 15+ years, who will look into your matter and will get the job done with complete transparency and integrity. We also ensure your books of accounts are up-to-date and professional, and are compliant to the IFRS (International Financial Reporting Standards).
Question Answer
Frequently Asked Question
If registration is required, the person must apply for tax registration within 30 days of the requirement.
If the deliveries of goods or services are made, then the person must register for VAT, and no other person is liable to pay the tax in the UAE.
Unless the item is exempt, the sale of the asset by a VAT registrant would be deemed a taxable supply and subject to standard rate VAT. Nevertheless, they are not eligible for VAT if the firm or its assets are sold as a going concern to a taxable person.
Lets Get Started
Get Started with Our Expert Accounting Solutions Today
Lorem ipsum dolor sit amet, consectetur adipiscing elit. Ut elit tellus, luctus nec ullamcorper mattis, pulvinar dapibus leo.
