Our ServicesVAT Registration in UAE

Value Added Tax (VAT) takes an important place in the tax system of the UAE especially after its introduction in the year 2018 as one way of raising other sources of revenue for the nation instead of solely relying on oil exports. For businesses that are carrying out their duties in the UAE, value-added tax registration is mandatory provided the taxable supplies and imports cross the minimum threshold for registration. It doesn’t matter whether one is in Dubai or Abudhabi or in any other Emirate, one of the very core things that people need to know is how to register for VAT so that they don’t get fined for going against the law.

In this blog, we’ll break down the VAT registration process in the UAE, including when you need to register, how to register for VAT in Dubai and Abu Dhabi, and some common FAQs regarding VAT registration.

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What is VAT Registration in UAE?

VAT stands for Value Added Tax and it is a type of indirect tax levied on the consumption of both goods and services. In the UAE, the standard rate of VAT is set at 5% and is applicable on almost all goods and services, with certain exceptions for services like education and health care. People pay VAT to businesses and businesses pay revenue to the government and it is for this reason in almost chapter two of the separate regulatory regime it is stated that all businesses should register for VAT whenever their taxable supplies and imports cross AED 375,000 per year.

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When and Why Do You Need to Register for VAT in UAE?

All businesses operating in the UAE will be obliged to register for VAT provided the following limits are not exceeded:

Mandatory Registration: Each business that has made taxable supplies and/or imports that have a total volume exceeding AED 375,000 during the past 12 months or expects to exceed this figure within the next 30 days must register for VAT.

Voluntary Registration: Where the value of taxable supplies and imports, or the value of expenses liable for VAT, is higher than AED 187,500, such businesses may choose to register for VAT.

The second and most vital task is to determine whether a business qualifies for mandatory registration or if it is better off relegating to voluntary registration.

Step-by-Step Guide to VAT Registration in UAE

Here’s how the registration for the VAT process works in the UAE if you are in Dubai, Abu Dhabi, or anywhere else in the United Arab Emirates.

Step 1: Gather Necessary Documents

Before starting DETAILED STEPS A AND B of the VAT registration process, be sure to have all the required documentation in hand:

Trade license of the business
ID and passport photocopies of the business owner or partners
Company’s contact details (address, email, and telephone numbers)
Bank details of the concerned company
Turnover statements with the annual revenue of the company
Description of business activities and partnerships, if any.

The preparation of these documents will assist in expediting the process for VAT registration.

Step 2: Familiarize Yourself With the FTA Website

The FTA portals are concerned with VAT registration in the UAE. Additionally, all the clients intending to register for VAT are required to access a portal in order to create an account and provide a verified email and other general information. Afterward, the user can access the VAT registration form to fill in.

Step 3: Fill in the VAT Registration Application

After logging in to the FTA service, you can find the registration application inside the registration services on the home page. The form requires information on some of the aspects of the business which include:

What type of business it is (whether it is on the mainland, in a free zone, or offshore)

The turnover will come from taxable supplies.

Engagements in importation and exportation

Financial details including evidence of all turnover

Take your time while completing the VAT registration form to ensure that you do not make mistakes that will slow down the process of registration.

Step 4: File Your VAT Registration Form

When the form is finished, check that all details are correct. After these checks have been made, the form is submitted via the FTA portal. After you file your application, the FTA will process the application and if the application is approved, a VAT registration number will be issued to you.

Step 5: Obtain Your VAT Registration Number (TRN)

As the last step, after effective filing and assessment, the FTA will provide a VAT registration number, also referred to as a Tax Registration Number (TRN). This number is significant to a company because it relates to the company’s obligation to submit its VAT returns to the relevant authorities. Upon receipt of TRN, VAT registration for your business is considered to have been done successfully.

VAT Registration in Dubai and Abu Dhabi

It does not matter the location of your business, in Dubai, Abu Dhabi or any other place in UAE, the process to follow for the VAT registration does not change. However, free zone companies should also note that there are some rules that will apply depending on the VAT treatment of that particular free zone.

Given that Dubai and Abu Dhabi are business activity cores in the provinces of UAE, it is highly likely that VAT Registration in these Emirates will be mandatory. Therefore, when undertaking VAT registration in Dubai or Abu Dhabi which is often troublesome, it is prudent to engage professional firms like MBK Auditing.

Value-Added Tax as a Compliance Tool

Compliance with VAT is important for all businesses operating in the UAE. It not only helps prevent the imposition of fines and penalties but also encourages confidence in the customers and the stakeholders. Otherwise, non-compliance with tax regulations may attract penalties and fines, – losing a trading license and ruining the company’s image.

VAT services are designed to enable a firm to adhere to the different regulations and requirements imposed, assist with filling out of VAT returns and ensure compliance with the tax laws.

Conclusion

VAT registration in the UAE is important for businesses as it guarantees their adherence to the regulations of taxation in the country. It does not matter the location of the business in Dubai, Abu Dhabi, or any other Emirate due to the simplicity of the process if done in the right manner. Nevertheless, if you are not certain of the needs or want to make it easier for yourself, it would be best to resort to professional VAT registration services in Dubai or Abu Dhabi to spare any hassle.

Moreover, at MBK Auditing, we offer VAT registration services in UAE for businesses to help them carry out the process and remain compliant with VAT laws. Reach out to us today to find out how your business can benefit from our services in VAT registration, VAT returns, and tax compliance in the UAE.

FAQs on VAT Registration in UAE

Who needs to get a VAT registration in UAE?

The businesses need to have a VAT registration once the total taxable supplies and imports exceed AED 375,000 per annum. Companies with taxable supplies or expenses surpassing AED 187,500 may also acquire a Voluntary registration.

How much time is required to complete VAT registration in UAE?

Once the VAT registration application is submitted, the process of registration will normally take around 10-20 business days to complete. However, the period can be longer or shorter depending on the business structure and the information provided.

What are the implications of not registering for VAT?

If a person fails to register for VAT within the deadlines stipulated, sanctions may be levied by the Federal Tax Authority. For non-registrants, the charge is AED 20,000, and additional penalties may apply on top of this amount for failure to pay VAT registration charges on time.

Is it possible to voluntarily register for VAT ‘pre-threshold’?

Companies may be allowed to register for VAT even though they may not have reached the mandatory threshold of AED 187,500. It is usually an advantage for companies who intend to increase their business or reach out to more customers.

Do free zone companies need to register for VAT in UAE?

Free zone companies must register for VAT if they carry out taxable business activities and exceed the registration limit. Some exceptions include specific free zones that perhaps may hold VAT non-applicability or zero-rate tax treatment.

How often do I need to submit a VAT return?

In the UAE, businesses are required to file their VAT returns on a quarterly basis. Businesses should file their returns and pay any value-added tax due within 28 days after the expiration of the tax period. Otherwise, there may be consequences for the late payment.