VAT registration UAE: All you need to know

All companies in the UAE need to have their VAT registration UAE. As this is what the government uses to recognize companies as goods and services providers. In addition, it is what authorizes you to charge VAT to all customers who consume your products and also, remit it to the relevant government entities.

In this article, you will see all the information you need to know about VAT registration in UAE. The first thing will be to teach you what VAT registration in UAE is, so you can understand its importance. Secondly, you will see who are the entities that have to carry out this process. In addition, we will show you all the steps you must take to register for VAT.

  1. Do you know what is VAT registration in UAE?
  2. What are the types of UAE VAT registration?
  3. Learn how to register for VAT in UAE
  4. Find out who can register as a VAT group
  5. When can you request the deregistration?

1. Do you know what is VAT registration in UAE?

The VAT or Value Added Tax is a tax that is on the use of goods, consumption, or services. This tax was introduced on January 1, 2018, in the UAE at a rate of 5%. In this way, this tax will provide the UAE with a new source of income to be able to offer high-quality public services.

With the VAT, it will also help the government to reduce its dependence on oil and other hydrocarbons as the main source of income. Therefore, a company will be required to perform VAT registration in Dubai if the supplies and imports to which they are subject exceed AED 375,000 annually. However, other cases will be detailed later.

1.1 The VAT chronology

All those companies that register for VAT will not have any registration sanction until April 30, 2018. However, they must settle all taxes owed since January 1, 2018. Before, the last date for VAT registration in UAE was on December 4, 2017, but it was extended by the FTA to the date of April 30, 2018

2. What are the types of UAE VAT registration?

VAT threshold UAE so that companies can register for VAT; based on the values ​​of their supplies that are subject to tax. This includes standard rate supplies, collect received, zero rate supplies, and imported goods. It is important to note that if you want to register a new company, the type of registration may vary.

Taking into account everything established above, the different types of VAT registration that exist in the UAE can be observed below:

2.1 Mandatory registration

All companies must register for VAT. This is if the total value of all your dutiable supplies and imports into the territory of the UAE exceeds the mandatory threshold. The threshold is set as stated above at AED 375,000 annually. Therefore, all companies that exceed this must register on a mandatory basis.

2.2 Voluntary registration

Any company may register voluntarily for VAT. This is if the total value of all your supplies and imports that are subject to UAE tax exceed the voluntary registration threshold. This threshold is AED 187,500 per year. Similarly, a company will be able to register voluntarily if the expenses exceed the voluntary registration threshold.

2.3 VAT registration Dubai for foreign companies

It is very important to mention at the outset that for foreign companies there is no set threshold for VAT registration in Dubai. In this way, practically foreign companies must register for VAT. All this, regardless of the value of your imports and the taxable supplies.

3. Learn how to register for VAT in UAE

All companies must go through a registration process to start complying with VAT obligations. Surely, you are wondering how to register VAT in UAE. Currently, this process is done through the online system of the Federal Tax Authority (FTA). To carry out the VAT registration FTA, you must follow the following steps.

3.1 Step 1

To get started with the FTA VAT registration process, the first step is to go to the FTA website. Once you are there, you have two possible options: create an account or enter the one that you have already created. In case you do not have an account, you must start the registration process.

3.2 Step 2

When you give to register you must follow all the steps that appear on the screen. They will ask you for certain personal data, for instance, the unified number and the establishment card. Once you complete this process, they will send you an email that will help you verify all the information and also activate the account. By completing this, you proceed to log in with the username and password of your choice.

3.3 Step 3

When you log in, you will see different options, of all those you must select “register for VAT”. A VAT registration Dubai form will appear, you must provide all the necessary data and details to complete the process.

3.4 Step 4

This is the most important time for any type of registration, not just for VAT registration in UAE; This is the step of delivery of documents that will serve to validate the information entered. Below you will see all the documents required for VAT registration in UAE.

  • The first document required is a photocopy of the company owner’s passport.
  • The emirates ID of the company owner.
  • Business license of the company.
  • Some official document that authorizes your company to carry out any commercial operation in the UAE.

In addition, there are certain details of your business that you must provide, which are as follows.

  • A brief but explanatory description of the business.
  • Every company in the UAE must have a bank account, it is best to use the International Bank in Dubai. Given this, you must provide billing amounts for the last year.
  • In addition, you must deliver billing amounts that you have projected for the future.
  • All the values ​​you expect for exports and imports.

3.5 Step 5

After you have submitted the documents and completed the application, all you have to do is select Submit. The FTA will be in charge of processing the application and if everything is correct, they will send you an email with the verification of TRN (Tax Registration Number).

If you have problems receiving the email or want to check the status of your application yourself; The VAT in the UAE registration platform allows you to check the status of this. If you are one of those people who is constantly aware of this, it is because you sent the form and the FTA received it. Therefore, all you need is for the relevant authorities to verify the information.

Three possible statuses can happen, the first is that everything has gone well and therefore, they grant you the VAT certificate and your TRN number. The second possible state is suspended. This is when the registration application has been suspended; however, they will send you the TRN. Finally, your application may be rejected.

Generally, applications that are denied are because the FTA realizes that there are documents that are missing. It may also be that they are not complying with the regulations and legal processes to obtain the papers.

3.6 What are the consequences of not performing VAT registration in the UAE?

The VAT concept and all VAT-related services are considered a practically new concept in the Middle East. However, the VAT has been in effect for many years around the world.

Knowing this, it is normal that there are different cases in which new companies carry out VAT registration in UAE, outside the allowed times. When these things happen, the tax authorities will hit you with a rather expensive fine. The amount may vary but is currently approximately AED 10,000. Furthermore, they will not be allowed to continue their business operations.

On the other hand, if you do the whole process of VAT registration in UAE at the right time and pay all taxes on time. Your company will be granted a VAT certificate so you can start all your business activities.

4. Find out who can register as a VAT group

Currently, some companies own different entities, and these, trade with each other. The best way to do VAT registration in the UAE is to do it as a VAT group. That is, make a single record of all entities, within the same VAT group. This allows all entities to be treated as one in everything related to VAT payment.

In addition, all deliveries made between the same members of the VAT group should not be taken into account. That is, if commercial activities are carried out between entities of the same group, you should not pay the corresponding consumption taxes.

On the other hand, all commercial activities carried out by an entity belonging to the group with one that is outside; must comply with all common VAT regulations. When a company proceeds to register a VAT group, it is given access to a single TRN and this will be the only one that will be presented when making the VAT declaration.

5. When can you request the deregistration?

All persons who are VAT registered in the UAE are allowed to apply for deregistration. But, they have to meet one of the following conditions.

  • The registered company no longer makes any type of taxable deliveries.
  • The value of supplies subject to VAT is well below the threshold for any voluntary registration of AED 187,500, for a period of one running year. That is 12 consecutive months.
  • In addition, the value of the products or services is subject to taxes below the mandatory threshold of AED 375,000, for an exact period of 1 year.

All companies that carry out voluntary VAT registration; must be kept registered for at least 1 year before being able to request deregistration. Each state that is a member of the GCC has the option of determining the minimum period for which taxpayers must maintain their registration.

All taxpayers who wish to withdraw before the minimum date established by their state should know that they cannot. In addition, all member states can also set extra conditions; so their taxpayers can be considered for the registration cancellation process.

Finally, once the taxpayer requests his withdrawal, the TLC will let him know that if the withdrawal was approved, the date from which this withdrawal will be effective will be specified.

5.1 Conclusions

You can realize that VAT registration in UAE is a procedure that is necessary for all companies that wish to carry out their commercial operations in this country. Everything related to VAT registration is considered a solid body of knowledge of legislation; in addition to different local tax procedures. Taking into account all the appropriate language skills.

That is why it is important to carry out the entire process correctly. Because any error will cause the instant rejection of your application. The consequences of not having this documentation can be quite serious. The most important is that it limits you in carrying out and developing your commercial activities.

When it comes to all the information regarding company legislation, it will never be enough. Therefore, it is important to keep researching to stay abreast of all updates on these issues. That is why, by entering EOR Middle East you have access to our blog, which contains all this type of relevant information. And not only that but it is also explained in a simple way for the easy understanding of the public.

In case you want to be part of one of the many companies that are found throughout the Middle East; The most feasible option to successfully meet this goal is entering The Talent Point. In this web portal, you can find different job offers that may be of great interest to you. We also have another information channel and it is through our email [email protected].

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