Value Added Tax (VAT)
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Introduction to VAT Registration in UAE
A company that has registered under the VAT law is recognized by the government as the seller of Goods and Services and is qualified to charge consumers VAT and submit it to the government. Only firms that have registered for VAT will be permitted to:
VAT must be applied to taxable supplies of goods and services.
Claim Input Tax Credit for VAT paid on their purchases, which will be subtracted from VAT due on sales.
VAT payment to the government
Regularly submitting a VAT return
In addition to the aforementioned, all registered businesses are required to align their business reporting structures with the compliance standards. Therefore, one of the crucial elements in your VAT preparation would be to understand the foundations of VAT, and being registered for VAT will be the first step in converting your company to the VAT era.
What is VAT?
Value Added Tax (or VAT) is an indirect tax applied on the consumption of most goods and services. It is also known as a specific variety of general consumption tax. Before the final sale, it is imposed on a product at every stage of production.
How to Apply for VAT Registration in UAE
Businesses in the UAE that generate more than AED 375,000 in revenue are required to voluntarily register for VAT. The Federal Tax Authority (FTA) has opened its site for online VAT registration in order to make it easier for businesses to register. The FTA has already stated the deadlines based on the annual revenue of the enterprises, and the registration process will be carried out in stages. While it's vital for businesses to understand their need to register for VAT, it's equally crucial for businesses to understand how to apply for VAT registration and the degree of information needed to finish the online registration procedure:
Creation of e-Service Account
Login to your e-Service Account
VAT Registration Form:
Personal details
Contact information
Banking information
Business information – including those you have business relationships with
Review & submit
VAT Registration Requirements in UAE
Businesses must provide all the necessary documentation for VAT Registration in order to obtain the Tax Registration Number (TRN). The following documents are needed for VAT registration in order to register online:
Copy of business license No.
A passport copy of the owners, shareholders, or managers of the business who hold the trade license.
A copy of the owner's, shareholder's, or manager's Emirates identification card.
Company contact information.
The Memorandum of Association (MOA) is optional for solo businesses.
Contact information for the worried party.
The company's bank details.
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A declaration of revenue for the last 12 months.
A sample of an invoice for sales or purchases.
Is the company dealing with the customs department? If so, provide a customs letter.
Who is obliged to register for VAT?
UAE-resident businesses that make taxable supplies in the UAE must register for VAT if the value of their taxable supplies and imports in the previous 12 months surpassed, or is projected to exceed, the necessary registration threshold of AED 375,000 in the next 30 days. Regardless of the value of their taxable imports and supplies, non-UAE-resident businesses that make taxable supplies in the UAE are also required to register for VAT if no one else is responsible for paying the required tax on those supplies in the UAE.
Why should a business register for VAT in the U.A.E?
VAT registration is beneficial for businesses since, unlike non-registered businesses, who are end-users and are not eligible to collect VAT, only registered businesses can claim input VAT paid on their purchases and expenses. In other words, if a business is not registered, it loses input VAT and must bear the cost of input taxes, which drives up selling prices, reduces market competitiveness, and slows corporate growth. Additionally, the Federal Tax Authority (FTA) would impose fines and penalties for non-registration. Registration is crucial as a result.
What are the causes for non-compliance of VAT law that would lead to the imposition of penalties?
The following actions will result in penalties for violating the VAT law:
Failing to register for VAT when obliged to do so.
Any person who pays their taxes late.?
A person who fails to maintain the records the applicable tax legislation requires.
Is VAT registration mandatory in the UAE?
No, not every firm needs to register for VAT. VAT registration is required if the total cost of your taxable supplies in a given year is greater than AED 375,000.
How long does VAT registration take in the UAE?
After applying for the online VAT registration in UAE, it will take approximately 2 – 3 working weeks for FTA to review the VAT registration application and issue the Tax Registration Number (TRN).
Who is exempted from VAT in UAE?
The following products and services have a VAT rate of 0%:
Exports
International transportation services
Air and sea transportation services
Precious-metal investments
The availability of residential properties
Educational and medical services
Dubai businesses will need to register with the tax authorities in order to collect the VAT.
Penalties for late VAT registration
There are instances where people register to pay VAT in Dubai after the designated deadline. You should be aware that the tax authorities can apply fines up to AED 10,000. A VAT certificate will be issued to the business and it will then be able to begin operations if you register in time to pay this tax.
Co-Founder of Altrosyn and DIrector at CDTECH | Inventor | Manufacturer
1 年You mentioned VAT Guideline and its complexities. Historically, VAT guidelines have been complex, yet necessary to ensure fair taxation of goods and services. Analytically, VAT guidelines have become more sophisticated over the years, with more countries implementing it and attempting to streamline processes. My opinion is that VAT guidelines should be applied in a manner that is equitable and beneficial to all parties. To ensure this, we must use a combination of deductive, inductive, and abductive reasoning to draw parallels between various goods and services, while also utilizing case studies and concept understanding to make sure that the guidelines are properly applied. Additionally, it is important to use critical thinking to ensure that the best possible outcome is achieved. By applying all of these techniques, we can ensure that the VAT guidelines are applied in the most effective way.