Since the UAE implemented VAT on Value Added Tax (VAT) on January 1st, 2018, business owners must adhere to the regulations, including UAE VAT Registration and tax filings.
Businesses operating in UAE must ensure that VAT is collected correctly and adequately accounted for so that it can pay back to Federal Tax Authority (FTA).
UAE VAT Registration means that your company has been acknowledged by government authorities to take VAT from your customers and remit taxes to your government.
As a business owner, you must be aware of the vital aspects of VAT and taxation in the UAE.
These are quick step-by-step guides.
What is VAT?
Taxes on VAT are imposed on the exchange of services & goods that are applied at every stage within the supply chain. It is calculated based on the value added at each step. VAT is an indirect tax imposed on the Government of UAE at a nominal rate of 5 percent on most businesses and products. However, education, food items, and healthcare services are exempt from VAT.
UAE VAT Registration
If you need to be VAT registered is contingent upon the turnover per year of your business.
Exclusive from Registration for VAT Value of supplies that are less than Dh187,500
Voluntary UAE VAT Registration, The value of supplies is between Dh187.500 to Dh375,000.
Mandatory VAT Registration The value of supplies that exceed Dh375,000
After your UAE VAT Registration is approved, your registered company will be issued an individual tax identification number (TRN). Every VAT invoice will show the TRN.
UAE mainland businesses, as well as free zone companies, are taxed on VAT. The only ‘designated zones’ designated through Cabinet members of the UAE Cabinet are outside the UAE VAT taxation.
It usually takes between 3 and 5 days for the tax registration process to become processed.
VAT Return Filing
VAT-registered companies (taxable individuals) are required to submit an annual VAT return to the FTA.
A VAT return is a summary of the supplies and purchases a tax-paying person makes during tax time to establish the VAT liability.
You can file your VAT return online every month or every quarter by visiting FTA’s official website – https://www.tax.gov.ae/.
Tax returns should be filed promptly and generally in the first 28 days following the tax deadline. The tax period is the time frame in which taxes are due and due. The tax period:
* Monthly for companies with annual revenue over Dh150 million or greater.
The quarterly rate applies to businesses with an annual turnover of less than Dh150 million.
In contrast to other revenue from the business, the VAT you collect from customers is not an element of your business’s revenue. The VAT you collect is termed as VAT liability, and it has to be paid to the government of the UAE.
Vat liability is the gap between the tax on output due (VAT imposed on the supply of services and goods) and the tax on input (VAT incurred when purchasing) that is recoverable during a specific tax time.
If the output tax exceeds the input taxes, they must be paid to FTA. However, if there is excess output tax and input tax, the taxable person can recuperate the excess and apply it to the future payment due to FTA.
Documents Required for VAT Registration in UAE
You must provide duplicates of these documents to register for VAT registration.
- Certificate of registration or incorporation;
- Trade license
- Passport and visa, or Emirates ID of director/manager
- The partnership agreement or memorandum association, or other documents that contains information about the ownership of a business;
- The profile of the named company director;
- Bank account details;
- Contact details;
- Physical office space;
- List of business directories or partners in the UAE in the last five years
The Federal Tax Authority would also need to declare the following:
- The actual or estimated value of transactions in the financial sector;
- The registered business activities of the applicant;
- Information about the expected turnover of the company over the next thirty days;
- The turnover of the business over the previous twelve years (supporting documents are required);
- Information about the business’ anticipated exempt supply;
- All details about the business exports and imports of the company;
- Information on the customs registration process;
- The business activities of the GCC
The taxpayer or VAT-registered business is also required by the tax authorities to maintain the following records/documents:
- Tax invoices or any other document pertinent to the receipt of the goods or services you need;
- Credit notes for tax purposes, along with any other document that is issued by the business in connection with the acquisition of products or services
- The records of the taxable products received or manufactured;
- Tax invoices and any other document issued about products or services;
- Notes on the tax credit and any other type of document issued to purchase products or services
- Record of the goods or services which are used or disposed of by the company for purposes that aren’t related to the business, as in the tax paid for these;
- Record of the imports and the supply of products or goods;
- Documents of corrections or adjustments made to tax invoices or any other account;
- Record of products or goods which are shipped to a country
Any tax-paying person must keep tax records. That includes the following details:
- Taxes that can be recovered on imports or supplies;
- Tax recoverable subsequent adjustment or correction for error
- Tax due following adjustment or modification of error;
- Taxes due on all taxable items
UAE VAT Registration Process
When you have the soft copies of these documents, you’re in good shape to begin the registration procedure.
First of all,
Log in to e-service, and establish an account.
Complete the VAT online registration form
FTA (Federal Tax Authority) authorized e-service account is required to register VAT. However, setting up an account on their official website is simple.
VAT Rates in UAE
The rates for VAT in the UAE differ from product to product. The standard rate of the government is 5%. You should charge this amount unless your product or service is in”zero-rated” or VAT exemption “zero-rated” or VAT exemption.
Zero-rated rates are available on tax-exempt items, but the customer who purchases them doesn’t have to pay VAT. Your VAT account must record and report zero-rated VAT transactions too.
Certain services and products, such as housing, land, and financial services, are exempt from VAT.