VAT Registration in UAE

In 2018, the authorities of the UAE put forth a VAT regime for businesses. This regime requires them to register for VAT upon exceeding the threshold for obligatory registration set for taxable supplies and imports.

Companies registering for VAT in the Emirates must complete an online registration application on the website of the Federal Taxation Authority (FTA). The application process requires the provision of information about the company, its activities, and financial data. Once submitted, it is subject to FTA verification and processing.

After the process is complete, company owners receive a VAT registration certificate with a tax registration number and are then obligated to follow the FTA regulations. This includes charging VAT on taxable supplies, submitting VAT returns, and issuing VAT invoices.

Overall, VAT registration is vital for UAE companies that fall under the threshold criteria, and it is essential to understand and fulfill the obligations under the VAT regime to avoid any issues with the tax authorities.

Who Needs to Register for VAT in the UAE?

The criteria for VAT registration in Dubai and other Emirates is determined by a company’s overall turnover of taxable supply, which stands for the amount of goods or services made in the Emirates that can be either taxed at a rate of 5% or zero-rated. Imported goods are also considered taxable if they would be taxed in case of being supplied within the UAE.

In short, VAT registration in the UAE can be broken down into the following categories:

• Obligatory VAT Registration
  The threshold for obligatory VAT registration in effect in the UAE is set at AED 375,000. Once a company reaches this limit in its turnover of taxable supplies, its owners have to proceed with VAT registration as dictated by tax regulations.
• Voluntary VAT Registration
  A business owner can exercise the option of applying for VAT registration at his own will if it is beneficial for the company’s operations and if the overall amount of its taxable supplies or expenditures goes beyond the voluntary registration limit established at AED 187,500.
• Exemption from VAT Registration
  Companies do not have to undergo VAT registration in the UAE if the overall value of their supplies is lower than the voluntary registration limit of AED 187,500. Another VAT exemption option is supplying exclusively goods and services that fall under 0% VAT.

Paperwork Requirements for VAT Registration in the UAE

In order to register for VAT in Dubai and other Emirates, business owners need to provide the following list of documents:

• Trade license and/or commercial registration certificate
• Incorporation certificate (for corporate entities)
• Passport and Emirates ID of the business owner(s)
• Details of authorized signatories
• Title deed of lease agreement for company’s premises
• Detailed bank account information
• Financial statements and records
• Details of business activities and anticipated turnover
• Customs authority code (if applicable)
• Any other relevant documentation related to the company's operations and activities.

It is advisable to consult with the Federal Taxation Authority or a professional tax advisor to ensure all necessary documents are prepared and submitted accurately for VAT.

VAT Registration Deadlines in the UAE

The time limit for VAT registration in the UAE depends on the annual turnover of the company. The FTA has opened its online registration portal for businesses, so they can prepare for VAT registration beforehand. Currently, the regulations mandate businesses to register for VAT upon exceeding the thresholds for annual taxable turnover set forth by the FTA for voluntary or obligatory registration.

• Obligatory VAT registration is to be done within a 30-day period after reaching the AED 375,000 threshold.
• Voluntary VAT registration is to be done within a 30-day period after reaching the AED 187,000 threshold.

Turnover Calculation for VAT Registration

In the UAE, the turnover calculations for VAT registration are made on the basis of the total value of taxable transactions carried out by a company during the next 30 days or the previous 12-month period. In the process of turnover calculations for VAT registration, business owners should the following into account:

Taxable Supplies

This refers to the overall amount of goods and services sold by a company that are subject to VAT at the standard or zero rate, excluding any supplies that are outside the VAT spectrum.

Exempt Supplies

This refers to VAT-exempt supplies, and the turnover from these supplies does not have to be taken into account in VAT threshold calculations.

It's important that businesses thoroughly calculate their turnover and assess whether it goes beyond the registration thresholds. Failing to register for VAT in due time can cause penalties and fines. Additionally, the VAT rules and thresholds may be updated by the FTA, so business owners are strongly advised to stay informed of any alterations in the registration requirements.

Application Procedure for VAT Registration

In accordance with the UAE regulations regarding VAT registration, the application procedure presently consists of the following steps:

1. Check if your business is eligible for obligatory or voluntary VAT registration.
2. Gather the documents and information required for the registration procedure.
3. Visit the web portal of the Federal Taxation Authority to create an e-Service account, log in, and fill out the online registration form. You will be required to provide the necessary details and upload the required documents in the 8 sections of the form.
4. Complete and submit the application. Once it is done, the application will be processed by the FTA. During the review, it may in turn require the company owner to provide additional information or paperwork.
5. Once the application is successfully reviewed and approved, you will be granted a VAT registration certificate from the FTA along with your tax registration number.

It should be noted that VAT registration is an essential legal condition for eligible businesses, which is why it is vital to ensure that your company satisfies UAE’s requirements for VAT registration.

VAT Group Registration in the UAE

In the UAE, there is a VAT group registration option available to companies that meet a set of conditions. Registering as a VAT group allows a group of companies to act as a single taxable entity when it comes to charging VAT. This can provide certain advantages for businesses, such as facilitating compliance with VAT regulations in place, decreasing the overall administrative burden, and potentially optimizing VAT recovery.

To be eligible for VAT group registration, the group of companies must fit the following requirements:

• The companies must be related parties and have close organizational, economic, and financial ties, meaning they are under common control or ownership or one member controls the others.
• The members of the group must be established or have a place of residence in the UAE.

The representative member of the group must submit the necessary application to the FTA as part of the application procedure for VAT group registration. The application must include details of all group members and their consent to join the VAT group.

Once the registration process is complete, the VAT group members will be treated by the FTA as a single taxable entity. This means they will file a single VAT return and make a single VAT payment for the group as a whole.

It is important for businesses considering VAT group registration to carefully contemplate the requirements and implications of being part of a VAT group, which may include seeking consultancy or following up with the relevant authorities.

If you need help with the VAT registration of your business, contact our team today. Our specialists will provide you will all the information and services you need. Get a free VAT consultation now!