The UAE Taxation System mainly includes a significant element, the Value Added Tax (VAT), which has been in force since January 1, 2018, at the standard rate of five percent. Businesses are required to comply with the local tax regulations that require VAT for the supply of goods and services. Read this ultimate guide to VAT registration in UAE, who must register, how they can register, and certain vital points.
Who Must Register for VAT?
Businesses with an annual taxable turnover of over AED 375,000 must get registered under VAT. This includes the value of all taxable supplies of goods and services made within the UAE, imports, and reverse-charge. Businesses with gross turnover or expenses between AED 187,500 to AED 375,000 may register for VAT voluntarily. How Can The Voluntarily Registration Be In Favor of any Business Mindful Of Growth Or Input VAT Set Off? Related businesses also have the option of applying for VAT group registration, which enables several entities to register under one unique VAT number easing compliance.
The VAT Registration Process
The portal of the Federal Tax Authority (FTA) controls this online VAT registration in UAE. The businesses will start by creating an account on an FTA e-Services portal which will serve as the single point where they will manage all VAT-related activities such as registration, filing of returns, and payments. Businesses must then fill out the VAT registration form with detailed information including trade license details and business activities, and furnish financial records. Once an application is submitted, it will be reviewed by the FTA and if approved, a certificate of VAT registration bearing a unique Tax Registration Number (TRN) shall be issued.
Supporting Documents for VAT Registration
To do the VAT registration, businesses must provide a series of documents such as copies of trade licenses, owner or partners’ passport copies, and Emirates ID copies and describe what kind of business they have. You also need financial records to prove the necessity of VAT registration such as income statements and a summary of expected earnings and expenditures. Good and Complete Documentation Accurate documentation along with complete documentation leads to smooth registration.
Post-Registration Compliance
After registration, certain compliance requirements apply to businesses. It is required that businesses complete all VAT registrations, charge VAT on taxable supplies made by the business, issue tax invoices, and file returns with HMRC normally either quarterly or monthly depending on their size. All registered businesses are required to file VAT returns through the FTA portal that it has collected and paid. Firms must keep records of all the transactions such as invoices receipts and accounting books for at least five years. If the business fails to adhere to the VAT Federal Tax Authority laws and regulations, it will be penalized in this regard.
Benefits of VAT Registration
There are several advantages for a business to Free Zone VAT registration in UAE. This enables them to charge VAT from customers because sales are legal in such countries. Additionally, registered businesses are eligible to get input VAT refunds on their expenses contributing to a lower overall tax liability. In addition, VAT compliance is an indication that the business wants to operate within the legal framework and appeal safely to investors or partners.
Conclusion
The purpose of VAT registration in UAE is to keep up with the region’s tax compliance. Mandatory or voluntary, it is important to know the registration process and requirements for your business to work smoothly. Complying with VAT laws and keeping proper records help businesses not only escape penalties but also contribute to reputational and financial gains.
