VAT Registration in UAE
The UAE government introduced a VAT (Value Added Tax) system for companies in 2018. Once they surpass the mandatory registration threshold for taxable imports and supplies, they must register for VAT under this scheme.
Businesses must fill out an online registration application on the Federal Taxation Authority’s (FTA) website in order to register for VAT in the Emirates.
Information about the business, its operations, and financial data must be provided as part of the application process. After submission, it must be verified and processed by the FTA.
Following the procedure’s completion, business owners must comply with the FTA requirements and receive a VAT registration certificate along with a tax registration number. This covers issuing VAT invoices, filing VAT returns, and charging VAT on taxable supplies.
All things considered, VAT registration is crucial for UAE businesses that meet the threshold requirements. Understanding and carrying out obligations under the VAT system is essential to prevent problems with the tax authorities.
Who needs to register for VAT in the UAE?
When a company’s total revenue hits the AED 375,000 mark, it meets the requirements for VAT registration in Dubai and other Emirates. They must register or apply for an exemption, whichever is appropriate, at this time, regardless of when they reach this limit.
VAT taxation in brief
Before registering and filing for VAT, businesses must have a thorough understanding of VAT and VAT rates in the United Arab Emirates.
- Standard VAT rate (5%): 5% VAT must be charged and paid by businesses for the majority of products and services.
- Zero-rated supplies: Businesses can recover the input VAT on associated expenses because it is taxed at 0%.
- Exempted supplies: Although input VAT recovery is not allowed, no VAT is charged.
- Out-of-scope supplies: Transactions outside of the UAE’s VAT jurisdiction are exempt from VAT.
VAT registration requirements
The following categories apply to VAT registration in the United Arab Emirates:
Obligatory VAT Registration
In the UAE, the mandatory VAT registration level is AED 375,000. According to tax legislation, a company’s proprietors must proceed with UAE VAT registration once its general turnover reaches this threshold. To avoid penalties, it is advisable to register in advance and to predict when their sales will get this amount.
Voluntary VAT Registration
If it is beneficial for the operations of the business and the total revenue exceeds the voluntary registration threshold of AED 187,500, the business owner may choose to file for VAT registration himself.
Exception from VAT Registration
In the UAE, businesses are exempt from VAT registration requirements if the total value of their supplies is less than the AED 187,500 voluntary registration threshold. Another way to avoid VAT is only to provide products and services subject to 0% VAT.
You can choose to file for an exception if your business only sells goods and services outside of the UAE and GCC VAT-implementing countries and your revenue is close to AED 375,00.
If the FTA approves the exception, you won’t have to file the VAT; if not, you will have to do so on a quarterly basis, but it will be 0%-rated.
Don't miss out on this limited-time opportunity!
We'd Love To Hear From You
contact us
Find us Here
Office No 20, 4th Floor, Al Moosa Tower 2,
Sheikh Zayed Road Dubai, United Arab Emirates P.O. Box 27614.
Get In touch
+971 4 824 4842
info@jsbincorporation.com
Send Your Inquiry
Paperwork requirements for Dubai VAT Registration
Business owners who wish to register for VAT in Dubai and other Emirates must provide the following list of documents:
- A certificate of business registration or a trade license
- Certificate of incorporation (for corporate entities)
- Emirates ID and the business owner’s passport
- Information about the authorized signatories
- A shareholder’s and an authorized person’s contact information (email address and UAE mobile number)
- Comprehensive details about a bank account
- Records and financial statements
- Information about the company’s operations and anticipated turnover
- Customs authority code (if applicable)
- Any other relevant documentation related to the company’s operations and activities.
To make sure all required paperwork for VAT registration is generated and filed correctly, it is advised to speak with the Federal Taxation Authority or a qualified tax expert.
VAT registration deadlines in the UAE
The UAE’s VAT registration deadline is set when the business reaches the AED 375,000 total turnover threshold. The FTA has activated its online registration portal to give businesses enough time to prepare for VAT registration.
Currently, the regulations require companies to register for VAT if their taxable turnover exceeds the thresholds established by the FTA for either mandatory or voluntary registration.
- Following the AED 375,000 threshold, mandatory VAT registration must be completed within 30 days.
- The voluntary VAT registration must be completed within 30 days after reaching the AED 187,000 threshold.
Penalties for late VAT registration
In the UAE, there are severe penalties for missing VAT registration dates. AED 10,000 is the penalty for companies who do not register within 30 days of exceeding the turnover criteria.
The penalty for missing the deregistration date is AED 1,000 per month, up to a monthly maximum of AED 10,000.
Moreover, there are increasing penalties for late VAT payments: 2% of the outstanding balance is assessed immediately, 4% after seven days, and 1% each day after one month. These penalties can add up to 300% of the initial tax due.
Turnover calculation for VAT registration
The total value of taxable transactions a business has completed over the last 12 months or the next 30 days is the basis for the turnover calculations for VAT registration in the UAE. Business owners should consider the following when calculating turnover for VAT registration:
Taxable supplies
The total quantity of products and services a business sells that are liable to VAT at either the standard or zero rate. Excluding any supplies that fall outside of the VAT spectrum.
Exempt supplies
This refers to supplies that are exempt from VAT; the turnover from these goods is not required to be included in the calculations of the VAT threshold.
Businesses should carefully compute their turnover and determine if it exceeds the registration limits. Penalties and fines may result from late VAT registration.
Additionally, business owners are highly encouraged to keep up with any changes to the registration procedures, as the FTA may revise the VAT laws and thresholds.
Application procedure for VAT registration
The current application process includes the following stages in compliance with UAE VAT registration regulations:
Determination of eligibility
Verify whether your company qualifies for voluntary or required VAT registration.
Document preparation
Compile the information and paperwork needed to register for VAT in the United Arab Emirates.
Registration via the FTA portal
Go to the Federal Taxation Authority’s website to register for an e-Service account, log in, and complete the online VAT registration form. In the eight sections of the form, you will need to provide the relevant information and upload the appropriate files.
Application submission
Finish the application and send it in. The FTA will process the application after it is finished. It might then ask the business owner to provide more documents or information throughout the review.
Receiving the registration certificate
You will get your tax registration number (TRN) and a VAT registration certificate from the FTA upon successful evaluation and approval of your application.
It should be mentioned that VAT registration is a necessary legal requirement for qualified companies, so it is critical to make sure the company meets UAE VAT registration standards.
It is advised to do this in order to ensure that registration eligibility and requirements are met accurately by speaking with a tax consultant.
VAT group registration in the UAE
Companies that fulfill specific requirements can register as a VAT group in the United Arab Emirates. A group of businesses can act as a single taxable entity for the purposes of charging VAT by registering as a VAT group.
This can benefit businesses by making it easier to comply with existing VAT laws, reducing the total administrative load, and possibly increasing VAT recovery.
The group of companies must meet the following criteria in order to be eligible for VAT group registration:
- The businesses must have strong organizational, financial, and economic relations and be linked parties. This means that they must share ownership or control, or one member must have authority over the others.
- The group’s members need to be based in the United Arab Emirates or have a residence there.
The application process for VAT group registration requires the representative member of the group to submit the required application to the FTA. All group members’ information and their agreement to join the VAT group must be included in the application.
The VAT group members will be considered by the FTA as a single taxable entity following the completion of the registration process. This implies that they will submit a single VAT return and pay a single VAT for the entire group.
Businesses thinking about joining a VAT group should carefully assess the requirements and implications of doing so. This may involve consulting with the appropriate authorities or following up with them.
Post-VAT registration checklist: Key steps to stay compliant and grow your business
- Charge VAT correctly: Apply the 5% VAT on taxable supplies and make sure your invoices include the tax.
- Maintain accurate accounting: To accurately calculate VAT, file error-free returns, and recover input tax (VAT), make sure your books are kept up to date. For five years, keep complete records.
- Meet deadlines: Stay on top of VAT return and payment deadlines.
- Stay updated: Keep an eye out for developments on UAE VAT legislation from the Federal Tax Authority (FTA).
- Consult experts: Collaborate with accountants and tax experts to avoid penalties and legal troubles while freeing up time for business expansion.
Ensure UAE VAT registration compliance with JSB Incorporation
JSB Incorporation offers reliable bookkeeping and accounting services to simplify managing your company’s finances. Our staff ensures accurate and timely VAT and tax registration and reporting, relieving you of compliance burdens.
By contracting with JSB Incorporation, you can eliminate the need for an internal accountant. Our skilled experts use advanced software to handle your financial responsibilities, saving you time and money while complying with UAE laws.
Contact our staff right now if you need assistance with your company’s VAT registration to get a free VAT consultation!
FAQs
VAT registration can be completed online through the Federal Tax Authority (FTA) portal. You must create an account, provide the required documents, and submit your application.
Essential documents include a trade license, Emirates ID, and details of business turnover.
No. Exemptions apply to specific industries such as healthcare, education, and certain financial services. Businesses dealing only in VAT-exempt supplies may not need to register.
Yes. Businesses can apply for VAT deregistration if their taxable supplies fall below the mandatory threshold or if they cease operations. Approval from the FTA is required.
The VAT registration process typically takes 20 business days, provided all submitted documents and information are accurate and complete.
Don't miss out on this limited-time opportunity!
We'd Love To Hear From You
contact us
Find us Here
Office No 20, 4th Floor, Al Moosa Tower 2,
Sheikh Zayed Road Dubai, United Arab Emirates P.O. Box 27614.
Get In touch
+971 4 824 4842
info@jsbincorporation.com