VAT Registration UAE in 2021 - A Step by Step Guide
October 30, 2023 - 11:38 AM
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.
Here is our quick step-by-step guide to it.
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;
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 soft copies of the above-mentioned documents ready, you are ready for the registration process.
First off,
Register at e-service and create an account
Fill up the online VAT registration form
FTA (Federal Tax Authority) approved e-service account is mandatory for VAT registration. You can easily create one from their official site.
VAT Rates in UAE
The VAT rates in UAE vary from product to product. The government’s standard rate is 5% and you should charge that amount unless the product or services falls under the “zero-rated” or VAT exemption.
Zero rates are applicable on goods that are otherwise taxable however the end customer does not pay VAT. Your VAT account should record and report the zero-rated VAT transactions as well.
Certain products and services including residential buildings, land, and financial services are exempted from VAT.
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.
Foreign investors who acquire real estate in Dubai worth a minimum of AED 2 million can now apply for a 10-year Golden Visa, a remarkable opportunity provided by the DLD. This initiative has been implemented to encourage more investments in the Dubai property market and boost the economy.
The Golden Visa is an excellent opportunity for those
Here's what you need to know about it.
As is commonly understood, a Golden Visa is a residency permit valid for 5 or 10 years, that confers various advantages, such as the ability to reside and work in the UAE for a prolonged period, without the requirement of a local sponsor or employer. A Golden Visa presents investment prospects, elev
The UAE has made significant progress in promoting female entrepreneurship over the years. In the UAE, 77.6% of women-owned businesses (WOB) are run by people under the age of 40, according to a recent survey by NAMA Women Advancement in collaboration with UN Women.
The results of this study were published in the book "Women-Owned Businesse
According to E-commerce DB, the United Arab Emirates is the 28th largest market for e-commerce with an expected revenue of USD 11,782.3 million by 2023. E-commerce has helped many businesses gain access to the world market, allowing small businesses to expand their reach.
Setting up an e-commerce business has numerous benefits. Not only does it
CORPORATE BANKING
Opening a bank account for your company has many advantages. It contributes to the improvement of the company’s credibility, improves the financial management of the company, and offers protection for business funds, creating easier financial transactions. Clients of the company will feel reassured about its legitimacy, a
The United Arab Emirates mesmerizes with its incredible scenic beauty and unmatched modern infrastructure! It is impossible to believe it was once a vast desert with no amenities or life. However, the gracious rulers of the region had the vision and foresight to turn around the fortunes and make UAE a powerful and modern nation highly respected tod
The United Arab Emirates (UAE) offers a Golden Visa program for investors, entrepreneurs, and talented individuals looking to live and work in the country. This program grants long-term residency to individuals who make significant investments in the UAE, allowing them to stay in the country for up to 10 years and potentially even apply for citizen
The United Arab Emirates (UAE) has constantly been leveraging its limit to broaden the business scope. The Emirati Government's visionary leadership has aided in transforming the concept of business incorporation. Various segments and dedicated regions have been developed across the UAE to focus on specific business industries. Because petroleu
Business in the United Arab Emirates (UAE) has been growing to make many ex-pats into Business entrepreneurs. The investor-friendly regime has ensured that Dubai, Abu Dubai, and other emirates in the country are fertile for the growth and development of businesses. Consequently, the UAE witnesses one of the pinnacle enterprise locations around the
The idea of setting up a business in Dubai can be a lucrative opportunity for a company to broaden its reach and establish a reputable brand name internationally. You can benefit from Dubai's cutting-edge infrastructure, strategic location, easy access to nearby markets, and world-class connectivity whether you're a small, medium, or large
Dubai has been the flag-bearer of the United Arab Emirates's global progress for quite some time. The city provides expanding economic opportunities, diverse business start-ups, and investor-friendly policies to entrepreneurs from all over the world. Before you start forming your company, you must decide which free zone you want to operate in.
The United Arab Emirates (UAE) continues to attract more businesses around the world due to its strategic locations and business-friendly ambiance. To set up a business in Dubai legal procedures and documentation must be followed for ensuring the Legal Setup of your Business in Dubai. Once you've completed all of your legal procedures, starting
A business setup in Dubai can be a lucrative opportunity to expand the company's reach internationally and establish a reputable brand name. Whether you're a small, medium, or large business, you can take advantage of Dubai's cutting-edge infrastructure, strategic location, easy access to nearby markets, superior connectivity that makes
Trading is one of the most critical industries in the United Arab Emirates (UAE). According to new data, the UAE is the world's 25th largest exporter in the world. before that, we must see the trend. In 2014, Dubai was ranked first for airport connections to business districts and fifth for the most affordable city, making it a global 'City
The United Arab Emirates is one of the top trade and commerce destinations in the world. Authorities of Dubai have taken certain measures to boost the trade and commerce activities in the country to make the business hub of global trade. It has persistently seen trade and commerce growth in the past few years and it is continuing to do so. With a b
The first step in starting a business is to develop a winning business idea, but ideally, you will create a business that both interests you and fills a market need. When expanding your business in the city, you must raise awareness among the locals. It is critical to strike deals with local import and export dealers to maintain good connectivity.
Anyone Who is wondering to start a business in Dubai always considers the cities of the UAE as their first preference. For investors, the UAE has become a household name. As a result of doing business in the UAE, many residents have become successful entrepreneurs. The investor-friendly regime has made Dubai, Abu Dubai, and the country's other
When we look at how far Dubai has come in such a short period, it is easy to see why starting a business in Dubai is such an attractive prospect to many entrepreneurs. A business setup in Dubai is often a moneymaking chance to form a business, grow internationally, and build a reputed brand name. Whether you are a little, medium, or massi
Dubai is a grounded destination for business investors to step forward. Over the years, Dubai has become one of the most significant places to set up Business. From broad diversity in population to a flourishing economy, Dubai is a city of opportunities to large investors.
One of the attractions to set up business in Dubai is its tax r
The government in the UAE offers various incentives to Foreign business owners to register a business in Dubai. With the investments pouring in, there has been an increase in the number of companies in Dubai. The city's economy is flourishing, with no taxes, and their world-class infrastructure, business registration Dubai is on an all high. Al