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 50 483 6190 or email us at enquiry@aaconsultancy.ae.V
