Ever since the UAE introduced Value Added Tax (VAT) on January 1, 2018, business owners are expected to comply with the formalities including tax filings and VAT registrations. Businesses in UAE must ensure that the VAT is properly collected and accounted for to be paid to the Federal Tax Authority (FTA).VAT registration indicates that your company is acknowledged and authorized by the government to collect VAT from your customers and then remit it to the government. It is crucial that as a business owner you are aware of all key components of VAT in the UAE.
What is VAT?
VAT is a tax on the transactions of goods and services, applied at each stage of the supply chain and is based on the value-added at each stage. It is an indirect tax imposed by the Government of UAE, at a nominal rate of 5% on a majority of goods and businesses. Food items, education, and healthcare services are exempted from VAT.
VAT Registration UAE
Whether or not you should register for VAT depends on the annual turnover of your company.
| Exempt from VAT Registration | Value of supplies less than Dh187,500 |
| Voluntary VAT Registration | Vale of supplies between Dh187,500 and Dh375,000 |
| Mandatory VAT Registration | Value of Supplies above Dh375,000 |
Once your UAE VAT registration is approved, your registered business will be given a unique tax registration number (TRN). All VAT invoices will display the TRN. UAE mainland businesses and free zone companies are equally subject to VAT. Only ‘designated zones’ that are defined by the UAE Cabinet are outside the purview of UAE VAT taxation. The movement of goods between such designated zones is tax-free.
Typically takes 3 to 5 days for the VAT registration to be complete.
VAT Return Filing
VAT registered businesses (taxable persons) are required to file a VAT return each year to FTA. A VAT return sums up the purchases and supplies made by a taxable person during the tax period in order to determine VAT liability.
You can file your VAT return online every month or every quarte by visiting FTA’s official website - https://www.tax.gov.ae/
You should file returns on time and typically within 28 days of the tax period deadline. A 'tax period' is the period during which tax is due and payable. In general, the tax period is:
• Monthly for businesses with an annual turnover of Dh150 million or more.
• Quarterly for businesses with an annual turnover below Dh150 million
VAT Liability
Unlike other business revenue, VAT collected from customers does not form part of your business income. The VAT collected is referred to as VAT liability and needs to be remitted to the government of UAE.
Vat liability represents the difference between the output tax payable (VAT charged on supplies of goods and services) and the input tax (VAT incurred during purchases) recoverable for a particular tax period.
If output taxes exceed input taxes, they must be remitted to FTA. In the case of excess input tax over output tax, the taxable person will recover the excess and set it off against future payments due to FTA.
Documents Required for VAT Registration in UAE
You will have to furnish copies of the following documents for VAT registration
Registration certificate or certificate of incorporation;
Trade license
Passport and visa or Emirates ID of director/manager
The partnership agreement, memorandum of association, or any document that provides business ownership information;
Profile of appointed company director;
Bank account details;
Contact details;
Physical office location;
List of other partners or business directories in the UAE for the past five years
The Federal Tax Authority would also require a declaration of the following:
Estimated or actual financial transaction values;
Applicant’s registered business activities;
Details on the expected turnover of the business for the following thirty days;
Turnover of the business for the past twelve months (supporting documents are needed);
Details on the business’ expected exempt supplies;
All information regarding the business’ imports and exports;
Details on customs registration;
The business activities in the GCC
A taxable person or VAT-registered business is also expected by the tax authority to keep the following documents/records:
All tax invoices or any alternative document that is relevant to receiving goods or services;
Tax credit notes, as well as any alternative document received by the business related to the purchase of goods or services;
Records of taxable supplies received or made;
Tax invoices and any alternative document that is issued related to goods or services;
Tax credit notes, as well as any alternative document that is issued for goods or services;
Records of goods or services disposed of or utilized by the business for matters that are not related to th4e business, as well as taxes paid for such;
Record of imports and supplies of goods or products;
Records of corrections or adjustments that are made to tax invoices or any account;
Records of goods or products that are exported to any foreign country
Tax records have to be kept by a taxable person, which includes the following information:
Recoverable tax on imports or supplies;
Recoverable tax after adjustment or error correction;
Due tax after an adjustment or error correction;
Due taxes on all taxable supplies
VAT Registration Process
Once you have the required documents ready, completing your VAT registration with the FTA involves the following steps:
Step 1 — Create an e-Services Account
Visit the FTA's official portal and create an e-Services account using a valid email address. This account will be used for all future VAT-related transactions, including return filing and payments.
Step 2 — Complete the Online VAT Registration Form
Log in to your e-Services account and fill out the VAT registration application. This includes details about your business activities, expected turnover, trade license information and contact details.
Step 3 — Upload Supporting Documents
Attach the required documents — trade license, passport and Emirates ID copies, business ownership documents, and bank account details — to support your application.
Step 4 — Submit the Application
Once all sections are complete and documents are uploaded, submit your application for review by the FTA.
Step 5 — Receive Your Tax Registration Number (TRN)
After the FTA reviews and approves your application — typically within a few working days — you will receive a unique Tax Registration Number (TRN). This number must appear on all your tax invoices going forward.
What This Means for Your Business?
VAT registration is a fundamental compliance step for businesses operating in the UAE, and understanding your obligations early helps avoid unnecessary penalties and delays. Whether your business falls under mandatory or voluntary registration, having the right documentation ready and following the correct process through the FTA's e-services portal makes the process considerably smoother.
If you need expert guidance on VAT registration or ongoing VAT compliance, Danburite Corporate can help you handle the process accurately and efficiently — contact us today to get started.
FAQs
1. Is VAT registration mandatory in UAE?
No, VAT registration is not mandatory for all the business. If the value of your taxable supplies exceeds Dh375,000 in a given year, VAT registration is mandatory.
2. How long does VAT registration take in UAE?
After filling up your VAT application, it typically takes around 3 to 5 days.
3. Who is exempted from VAT in UAE?
Supplies of residential properties, bare land, some financial services, and local passenger support are generally exempt from VAT
4. What is a taxable supply under UAE VAT?
Taxable supplies are those on which VAT at the standard rate of 5% is levied.
5. Is VAT applicable on delivery charges in UAE?
According to UAE VAT law, VAT is due on charges incurred for goods delivered from one place to another.
