Value Added Tax Registration

Registration Criteria

Companies in UAE whose taxable supplies within UAE exceeds or is expected to exceed the mandatory registration threshold of AED 375,000. Companies whose value of annual taxable supplies exceeds AED 187,500 can chose to register voluntarily.

It is important to note that there is no threshold limit for individuals i.e. non established taxable persons and they maybe required to register.

The Taxable supplies includes

  • Standard rated supplies
  • Zero Rated supplies
  • Reversed charged services received
  • Imported goods

UAE VAT Registration Deadlines

  • The UAE tax authorities have announced the deadlines for Value Added Tax (VAT) registration:

    • Businesses with a turnover exceeding AED 150 million must apply for VAT registration before 31 October 2017.
    • Businesses with a turnover exceeding AED 10 million must apply for VAT registration before 30 November 2017.
    • All other business entities must submit their VAT registration application before 4 December 2017.
  • It is advisable that VAT registration must be completed in time for the VAT “go live” date proposed for 1 January 2018.

How to register for VAT

VAT registration form would be available online on FTA’s portal should be filled and completed. It should be completed by a person who is the authorized signatory of the business e.g. A director, shareholder, holder of Power of attorney on behalf of the business.

Voluntary registrations are expected to be open from Q3 of 2017 and compulsory registration from Q4 2017 onwards to give sufficient processing time for the implementation of VAT from 1st January, 2018.

Details required and documents required for VAT registration

The registration form will require details about the business as below

  • Description of business activities
  • Last 12 months turnover figures
  • Projected future turnover figures
  • Expected value of imports and exports
  • Whether the business expects to deal with GCC suppliers or customers
  • Details of Customs Authority registration, if applicable

Supporting Documents that are required

  • Trade License
  • Certificate of Incorporation
  • Emirates id and Passport Copy of signatory
  • Articles of Association
  • Bank account details

After approval of the application by FTA a Tax Registration number will be issued.

VAT Groups Registration

Group VAT registration can be applied for when two or more persons/businesses carrying on a business where

  • Each business has a place of establishment or fixed establishment in UAE
  • The businesses are related parties
  • Either one person controls the other or forms a partnership and controls the other

The entities within the VAT group are treated as one entity for VAT purposes and the supplies made between the members of VAT group are disregarded from VAT.

Tax Return filing & Payment

  • VAT return submissions to be made online
  • Due date of payment of VAT tax is set at 28days following the end of the return period. In case the return filing date falls on a public holiday or weekend the deadline in that case is extended to following first working day.

Record Keeping

  • Books of accounts

    • Annual accounts, general ledger, purchase day book, invoices issued or received, credit and debit notes.
    • All tax invoices and alternative documents relating to receiving goods and services
    • All received tax credit notes and alternative documents received
    • All tax invoices and alternative documents
    • All tax credit notes and related documents
  • Record of

    • All supplies and import of good & services
    • Exported good & services
    • Goods and services that have been disposed of or used for matters not relating to business
    • Goods and services purchased for which input tax was not deducted
  • Any other information as required by the FTA

Simplified VAT invoices

Where consideration for a supply is less than AED 10,000 a simplified invoice may be issued e.g.

Penalties

  • Administrative Penalties

    Not Less than AED 500 and not more than 3 times the amount of tax for which the penalty was levied.

  • Tax Evasion Penalties

    Up to 5 times the relevant tax at stake and a prison sentence.

Audits

The FTA can visit businesses to inspect records and make sure persons are paying or reclaiming the right amount of tax, and are able to check whether businesses are liable to be registered where they are not

  • FTA will apply risk based selection criteria to determine whom to audit.
  • FTA usually would conduct the audit at a persons’ place of business or at FTA offices
  • If audit at a person’s place then the person has to be informed atleast 5 business days prior to audit
  • FTA can close the place of business for up to 72 hours.
  • FTA officer may request for original records, take sample of merchandise, mark assets to indicate that they have been inspected
  • FTA may remove documents , records and samples
  • The audited entity should be notified of the results of tax audit within 10 business days of the end of audit.