The Value Added Tax (VAT) was introduced in the UAE on 1st January, 2018 in a move to diversify the country’s economy by bringing forth new sources of revenue. Since its implementation, VAT has acted as a catalyst for economic stability by becoming an integral component of UAE’s taxation framework. In tandem, VAT registration has become a pivotal step for ensuring compliance, affecting customers and businesses alike.
In the context of businesses, VAT registration in UAE is a fundamental duty for ensuring the smooth flow of business operations, building a trustworthy reputation as well as fulfilling the tax obligations to the Federal Tax Authority (FTA). So whether you’re a seasoned entrepreneur or a new business owner, understanding how VAT works is essential.
Understanding VAT Registration
VAT in UAE is an indirect tax which is applied to every step of the supply chain. Businesses usually collect VAT from their customers, on the behalf of the tax authority. This tax is mandatory for every business in the country.
Registering for VAT signifies that your business is officially recognised by the FTA for collecting and remitting VAT on taxable supplies of goods and services in the country. Apart from being recognized by the FTA, knowing how to register for VAT in UAE is also a strategic imperative for ensuring legal compliance, financial prosperity, and business progress.
Who has to Register for VAT in UAE?
Mandatory registration:
All businesses with a taxable supply over AED 375,000 within a period of 12 months are obligated to register for VAT in UAE within 30 days of exceeding the threshold. Taxable supplies in the UAE essentially covers all your sales, including VAT. If you don’t register, you can incur hefty legal penalties.
Voluntary registration:
All businesses in the UAE with a taxable supply above AED 187,500 can choose to register for VAT on a voluntary basis. Voluntary registration for VAT allows businesses access to certain tax credits, making it a good option for SMEs and startups.
Documents for VAT Registration in UAE
Although the specific documents may vary depending upon the business type, there are some documents that every business will need:
- Declaration letter for VAT registration (voluntary or mandatory)
- Sample sales or purchase invoices copy
- Copy of trade license
- MoA or an establishment card
- Passport copies of company owner and authorized signatories
- Emirates ID copies of company owner and authorized signatories
- Contact details (mobile number, email, company address)
How to Register for VAT in UAE
1. Prepare Documents
The first step is to gather all your paperwork for the registration process. Aside from the documents mentioned above, you may also need financial statements, Certificate of Incorporation, and a copy of your property or land deed.
2. Complete Online Application
VAT registration in Dubai or anywhere else in the UAE is done on the FTA website. You’ll need to create an account and add a new taxable person to register. The application will take about 45 minutes to finish. Make sure all the documents you attach are readable and accurate. You might also have to pay a VAT registration fee.
3. Wait for FTA Approval
Once you submit the application, the FTA will take around 20 working days to review and approve your application. You will be issued a Tax Registration Number (TRN) and a VAT certificate upon approval and will need it for all VAT-related activities.
Post VAT Registration
After you’ve completed VAT registration in UAE, you have to follow some best practices to make sure you’re staying compliant:
- Keep detailed records of VAT-related documents for at least five years
- Complete VAT returns filing on time
- Pay off any incurred VAT penalties immediately
- Charge 5% VAT on supplies when necessary and collect it from customers
- Issue VAT invoices (must include date of issue and TRN)
- Stay up to date on FTA regulations
- Complete the deregistration process if the annual turnover falls below the threshold or the business terminates taxable operations
How Can A&A Associate Help Businesses Register for VAT in UAE
The VAT registration process in UAE can be daunting, especially if you’re unfamiliar with UAE’s taxation system. This is where A&A Associate steps in as your trusted VAT consultant in Dubai. We can help you with:
- Streamlined document collection and preparation
- The application process
- Communication with the FTA
- Industry-specific VAT compliance
- Formulating pricing strategies that are VAT-inclusive
Timely registration and adherence to VAT regulations are essential for avoiding potential penalties and disruptions to your business operations. Partnering with A&A Associate can simplify the process and provide ongoing support for, allowing you to focus on running your business with peace of mind.
To get started with your VAT registration, contact us at +971 54 793 9972 or email us at enquiry@aaconsultancy.ae.V
FAQ’s
How Much is VAT in UAE?
VAT is an indirect consumption tax that is set at 5% in the UAE. It applies to most goods and services, although some supplies are zero-rated, meaning they are charged 0% VAT. The UAE has one of the lowest VATs in the world.
What are the Benefits of VAT Registration in UAE?
Businesses that register for VAT in UAE can increase the credibility and legitimacy of their operations by being tax compliant. VAT registration also allows companies to qualify for government incentives and VAT refunds.
What Happens if You Don't Register for VAT in UAE?
Failure to complete VAT registration in UAE can get you into trouble with the Federal Tax Authority (FTA). If you’re late to register for business for VAT, you will be fined AED 10,000. Non-compliance with VAT laws can get you penalties up to AED 50,000. Additionally, if you’re late in making VAT payments, you will be penalized 2% of the unpaid amount instantly. This will go up a 4% penalty if you delay it longer than a month.
Who Has to Complete VAT Registration in Dubai?
Any business who has an annual turnover of more than AED 375,000 has to register for VAT in UAE within 30 days of crossing that limit. This type of registration is mandatory. For businesses with annual turnovers exceeding AED 187,500, VAT registration is voluntary.
How Long Does it Take to Register for VAT in UAE?
The VAT registration application takes 45 minutes to complete, and the FTA takes 20 business days to review your application.
Is Anyone Exempt from VAT Registration in UAE?
Some supply and service categories are exempt from VAT:
- Local passenger transport
- Bare land
- Lease and sale of residential property
- Certain financial services
If you’re running a business in any of these sectors, you don’t have to register for VAT in UAE. But you do have to make sure to maintain records that validate your exemption, in case the FTA ever wants proof.
How To Register VAT in UAE?
You can register for VAT on the FTA website. You should add a new taxable person, submit required documents (contact information, trade license, passport and Emirates ID copies of authorised signatories and owners, Memorandum of Association), and wait for the Federal Tax Authority to approve your application.
What Happens After I Register for VAT?
After VAT registration in UAE, you will be issued a VAT certificate and a Tax Registration Number (TRN). Your TRN should be on every invoice you issue for VAT. Businesses also have to stay compliant post registration by filing their returns on time, charging VAT on taxable supplies and staying updated with FTA rules and regulations.
Should International Businesses Register for VAT in UAE?
Every business that operates in the UAE should register for VAT if they have an annual turnover that exceeds AED 375,000. You can also voluntarily register for VAT if your annual turnover is over AED 187,500.
When Should I File VAT Returns?
After VAT registration in Dubai or any other emirate, companies are now obligated to file their VAT returns by the deadline. The deadline is generally 28 days within the end of a company’s ‘tax period’. The standard ‘tax period’ is quarterly for businesses with an annual turnover under AED 150 million and monthly for businesses with an annual turnover of AED150 million or above.
What is the Minimum Turnover for VAT Registration in UAE?
It is mandatory to register for VAT for businesses with an annual turnover over AED 375,000. Voluntary VAT registration is available for businesses with annual turnover over AED 187,500. This makes knowing how to register for VAT in UAE essential knowledge for most corporate individuals.
What is the VAT Registration Deadline in UAE?
VAT registration in Dubai or anywhere else in the UAE has a deadline of 30 days after the crossing of the minimum turnover threshold. It is currently set at AED 375,000. There is no deadline for voluntary registration.
