This article talks about VAT registration in UAE, including the VAT registration threshold, TRN / VAT number, Online VAT registration in Dubai, and VAT deregistration in UAE.
Value Added Tax (VAT) is one type of indirect tax levied in more than 180 countries around the world. Unlike a direct tax (income tax, corporate tax), VAT is a tax on the consumption or use of goods and services, meaning it is the end customer who bears the cost of it. A Business collects the tax from customers on behalf of the Government. It pays it to the Government and obtains a refund for the tax it pays to the suppliers. To know more about VAT in UAE, refer to 11 things to know about VAT in UAE.
VAT registration threshold in the UAE
On 1st January 2018, VAT was introduced in the UAE. Currently, the rate of VAT is 5 percent. As per the VAT Law, VAT Registration in UAE is a must for businesses whose taxable supplies and imports exceed AED 3,75,000 on a per annum basis. For businesses with turnover exceeding AED 187,500 can optionally register for VAT. Businesses in UAE with a turnover of less than AED 187,500 need not apply for VAT Registration. Businesses expecting taxable turnover to exceed AED 375,000 in the next 30 days shall also register for VAT. While calculating the value of taxable supplies and imports, one needs to exclude the value of exempt supplies.
Obligations of a VAT-registered business
- A VAT-registered business must charge VAT at the applicable rate on taxable goods and services.
- It can claim the input tax credit for VAT paid on business-related goods and services. VAT paid on entertainment, personal, and employee-related expenses can not be reclaimed.
- It must maintain proper records for the Government to check.
- It must pay VAT to the Government
- It has to file the VAT return periodically
Applying for VAT Registration in UAE
The Federal Tax Authority (FTA) looks after managing and collecting federal taxes and fines and applying tax-related procedures in the UAE. There is a portal https://eservices.tax.gov.ae/ maintained by Federal Tax Authority (FTA) for facilitating online VAT Registration in UAE. Accordingly, one has to create an e-service account on the FTA portal and follow the steps for completing the Registration form. The same portal also enables amending a VAT registration and VAT deregistration. While filling up the Value Added Tax Registration Form, ensure that you submit the accurate information.
Documents required for VAT Registration
Following documents are required for VAT Registration :
- Trade License
- Passport Copy of Manager/Owner or Emirates ID of Manager Owner (If resident in UAE) or Passport Copy of Authorised Signatory or Emirates ID of Authorised Signatory (If resident in UAE)
- Proof of authorized manager/authorized signatory (articles of association, power of attorney attested by notary)
Steps for completing the VAT Registration Form
One needs to fill up the following sections in the VAT Registration Form:
- About the applicant
- Details of the applicant
- Contact details
- Banking details
- Business Relationships
- About the VAT registration
- Review and Submit
VAT Group Registration
Businesses sharing common economic, financial, and regulatory aspects may register as a VAT group. Such common aspects could be in the form of legal status, shareholding, or voting rights. They should have a business in the UAE and should be legal persons under common control. Such VAT registration is also known as a tax group. A representative member of the group files a consolidated VAT return covering all the activities of the group, and hence it simplifies the accounting and compliance requirements. However, all members of the group remain jointly and severally liable for VAT debts. Further, all the supplies made within the tax group do not attract VAT.
Tax Registration Number (TRN) / VAT Number
Once the Value Added Tax registration process is complete, the registrant receives a TRN. TRN issued by the FTA is a unique 15 digit number differentiating a VAT registered business from the others. The registrant is required to mention his VAT registration number in various documents such as invoice, credit note, VAT return, etc.
VAT Registration Amendments
If subsequent circumstances necessitate amendments in VAT registration, then they must be informed to FTA in 20 days from the occurrence of such circumstances. One would be able to make changes on the FTA portal itself, but some of the changes like details of the applicant, contact details, banking details of the applicant, business relationships, among others, require approval from FTA. While changes like Business activities of the applicant, GCC activities section, customer registration information section can be quickly made without seeking approval from the FTA.
One can deregister as a Taxable Person on the FTA portal if he is required or eligible to deregister.
Penalties for failure to register for VAT in UAE
If a business fails to register for VAT in UAE within the timeframe specified by the tax law, it will attract a penalty of AED 20,000.
Value Added Tax (VAT) is a kind of indirect tax. Businesses collect VAT at each stage in the supply chain, and it is the customer who bears the tax.
A VAT registered business can take benefit of input VAT paid on purchases and expenses. Further, non-registration amounts to a violation of the law, and it attracts penalties.
A Taxable Person is anyone who carries out the specific economic activity and is registered under the VAT law or required to be registered under the law.
Taxable supplies include a supply of goods and services for consideration in the course of conducting business in the UAE, and it does not include exempt supply. Taxable supplies include standard-rated supplies @ 5%, zero-rated supplies @ 0%, reverse charged services received, and imported goods.
Yes, you should go for voluntary VAT Registration. A person can voluntarily register for VAT if his turnover crosses AED 187,500. Further, anyone who is expecting taxable turnover to cross AED 375,000 in the next 30 days is required by the law to register for VAT. It is important to note here that VAT registration is mandatory if the taxable turnover exceeds AED 375,000.
Yes, zero-rated supplies do count towards AED 375,000 VAT threshold. You have to calculate your taxable turnover accordingly.
Your search for the best VAT Consultants ends here
N R Doshi & Partners is an FTA Registered Tax Agent. As a tax agent, we can assist our clients in applying for VAT Registration, fulfilling their tax obligations and exercising their tax rights. We, as a tax agent, can also represent our clients before the FTA if the need arises. We can assist you in fulfilling your VAT compliance requirements, and saving your time and efforts. We are equipped with a highly professional team to provide you with the best in class VAT Consulting to see that you always remain compliant with VAT laws.