Tax Registration Number (TRN)

The Tax Registration Number (TRN) plays a vital role in the UAE's Value Added Tax (VAT) system, ensuring tax compliance and transparency for businesses. Issued by the Federal Tax Authority (FTA), the TRN is a unique 15-digit identifier assigned to VAT-registered entities. Whether you're starting a new business, expanding an existing one, or ensuring compliance with UAE tax regulations, understanding the significance and application of the TRN is essential.

This article provides an in-depth overview of the TRN, including its importance, eligibility requirements, and application process.

Ready to streamline your VAT registration? Visit Filings.ae now to secure your Tax Registration Number (TRN) quickly and efficiently!

What is a TRN?

A Tax Registration Number (TRN) is a unique identifier assigned to businesses registered under the UAE's VAT system. It helps the FTA monitor VAT-related transactions, ensuring transparency and compliance. This identifier is mandatory for businesses that meet specific revenue thresholds, allowing them to charge VAT on goods and services and claim input tax credits.

Importance of TRN for Businesses in the UAE

The Tax Registration Number (TRN) plays a vital role in the smooth operation and legal compliance of businesses registered under the UAEâ??s Value Added Tax (VAT) system. Below are the key reasons why having a TRN is essential for businesses operating in the UAE:

• Legal Authorization to Charge VAT: Only businesses with a valid TRN are authorised to collect VAT from customers. The Federal Tax Authority (FTA) mandates that VAT-registered entities include their TRN on all tax invoices, ensuring transparency in the taxation process.  
• Enables Input Tax Credit (ITC) Claims: A valid TRN is crucial for businesses to claim Input Tax Credit (ITC) on their purchases. ITC allows businesses to offset the VAT they paid on inputs against the VAT collected on sales, reducing the total tax liability.  
• Compliance with Tax Regulations: Having a TRN helps businesses stay aligned with UAE tax laws and VAT regulations. TRN registration ensures that companies meet the FTA's requirements and file accurate VAT returns within the specified deadlines.  
• Transparency and Audit Readiness: TRN enhances the transparency of business transactions by facilitating traceability through official banking channels and tax invoices. Businesses with TRNs maintain proper records, making them audit-ready and reducing the risk of penalties during tax assessments.
• Prevention of VAT Fraud and Misuse: TRN verification is critical in curbing VAT fraud, such as charging VAT without being registered. By displaying a valid TRN on tax invoices, businesses protect themselves from fraudulent suppliers and ensure that VAT payments reach the FTA.  
• Builds Trust with Customers and Suppliers: Businesses with a valid TRN demonstrate their credibility and professionalism. Customers are more likely to engage with companies that follow tax regulations, as it ensures they receive valid tax invoices. Similarly, suppliers prefer working with compliant businesses to maintain their own VAT recovery processes.
• Facilitates Government and Regulatory Approvals: Government entities and regulatory bodies often require a valid TRN for processing various business applications, such as trade licenses or tender submissions. Companies with a TRN can seamlessly participate in government projects and apply for business permits.
• Avoids Fines and Penalties: Operating without a valid TRN when required can attract hefty fines and penalties from the FTA. Similarly, failure to quote the TRN on tax invoices and returns may result in non-compliance penalties.  
• Mandatory for VAT Filing and Returns: All VAT-registered businesses are required to file VAT returns with the FTA at regular intervals. A valid TRN must be included in every return, along with details of sales, purchases, and VAT payments. 
• Improves Financial Organization and Reporting: Businesses with a TRN adopt systematic record-keeping and better financial reporting practices. Since VAT-registered companies must issue compliant invoices and track input and output VAT, they develop organised financial management systems.

Also read: Is VAT applicable for freezone company?

Who Needs a TRN in the UAE?

Eligibility for TRN registration depends on a business's revenue and operations. UAE VAT laws classify registration as mandatory or voluntary based on specific revenue thresholds.

Mandatory Registration

• Revenue Threshold: Businesses earning over 375,000 AED annually or expecting to reach this threshold within the next 30 days are required to register for VAT and obtain a TRN.
• Compliance Requirement: Non-registration leads to penalties and prohibits the collection of VAT on sales.

Voluntary Registration

• Revenue Threshold: Businesses earning between 187,500 AED and 375,000 AED can voluntarily register for VAT.
• Benefits: Voluntary registration allows small businesses to gain credibility and claim input tax credits.

Also read: What is the threshold for VAT registration in UAE?

How to Apply for a Tax Registration Number (TRN) in the UAE?

Applying for a TRN involves a structured process through the Federal Tax Authority's (FTA) e-services platform. Here is a step-by-step guide:

Create an e-Service Account

• Visit the FTA e-service Portal.
• Click on  Sign Up and fill in your email, password, and security question.
• Verify your account via email and log in using your credentials.

Access the VAT Registration Form

• After logging in, click on  Register for VAT from your dashboard.
•  Review the  Getting Started Guide and confirm that you have read it.

Complete the VAT Registration Form

The registration form contains eight sections that must be filled out carefully.

Ensure all mandatory fields (marked with a red asterisk) are completed.

Upload required documents such as:

• Trade license
• Memorandum of Association (MoA)
• Passport copies and Emirates IDs of shareholders or managers
• Bank account details and financial statements
• Sample invoices from suppliers and customers

Submit the Application

• After completing all sections, submit the application.
• You will receive a confirmation email once the application is approved.

Receive Your TRN

It typically takes 20 business days to receive your TRN. In some cases, the FTA may request additional information, extending the process.

Required Documents for TRN Application in the UAE

To apply for a Tax Registration Number (TRN) in the UAE, businesses must submit specific documents to the Federal Tax Authority (FTA).   Below is a list of essential documents needed for the TRN application:

• Memorandum of Association (MoA): Outlines the company's structure, operations, and ownership details.
• Trade License: Proof of the business's legal authorisation to operate in the UAE.
• Import or Export Declarations: Relevant for businesses engaged in cross-border trade.
• Bank Account Details: Company bank account information for financial verification.
• Turnover Declaration Letter: Statement confirming the company's annual turnover.
• Company Contact Information: Official address, phone number, and email address.
• Emirates ID of Shareholders or Managers: Identification of key individuals associated with the business.
• Passport Copies of Shareholders or Managers: Additional identity proof is required during registration.
• Income Statement and Bank Details (Last Year): Financial statements demonstrating business performance and stability.
• Sample Invoices from Suppliers and Customers: Proof of business transactions, ensuring the company's VAT readiness.Verifying a TRN Number in UAE

Verifying the TRN of a supplier or business partner ensures compliance with VAT regulations and prevents fraudulent transactions.

Steps to Verify TRN

Follow these steps to verify a TRN on the FTA portal:

• Visit the FTA website and click  TRN Verification on the right-hand panel.
• Enter the 15-digit TRN and solve the CAPTCHA.
• Click  Submit to view the registered business name associated with the TRN.
• Ensure the business name matches the one on the invoice to prevent incorrect VAT claims.

Click here to learn more about verifying UAE tax registration numbers (TRNs).

How TRN Helps Businesses Align with UAE's VAT Laws

• Enables VAT Charging and Collection: With a valid TRN, businesses can legally charge VAT and comply with UAE tax laws.
• Facilitates Input Tax Credit Claims: Accurate invoices containing valid TRNs allow businesses to claim VAT paid on purchases as input tax credits.
• Prevents Non-Compliance Penalties: Businesses with a TRN are less likely to face penalties or fines for non-compliance, as it ensures proper VAT accounting.

What Happens if a Business Operates Without a TRN?

• Inability to Charge VAT: Businesses without a TRN cannot legally charge VAT, affecting their pricing and competitiveness.
• Loss of Input Tax Credit (ITC): Transactions without valid TRNs may lead to ITC rejections, increasing operational costs.
• Penalties for Non-Compliance: Failing to register for VAT when required can result in fines and penalties from the FTA.

How to Cancel a TRN in the UAE?

Businesses that cease operations or no longer meet the VAT threshold can apply for TRN cancellation through the FTA. The process involves:

• Submitting a cancellation request through the e-service portal.
• Clearing any outstanding VAT liabilities before the cancellation is processed.

Can I Use My Excise Tax Registration Number to Register for VAT?

No, an Excise Tax Registration Number cannot be used for VAT registration. After reviewing and approving the application, the Federal Tax Authority (FTA) assigns a unique Tax Registration Number (TRN) specifically for VAT. However, if you are already registered for excise tax, certain profile-related details may be automatically pre-filled, streamlining the VAT registration process. This ensures smoother registration but still requires a separate TRN for VAT compliance.

Conclusion

A Tax Registration Number (TRN) is crucial for businesses operating in the UAE, ensuring compliance with VAT laws and enabling seamless tax management. From registering under the FTA's e-services portal to maintaining accurate invoices and filings, a TRN streamlines business operations while preventing VAT fraud. Proper adherence to VAT regulations, including timely TRN registration, is essential to avoid penalties and enhance credibility in the UAE market. By understanding the significance of TRN, businesses can confidently navigate the VAT system and contribute to a transparent, compliant economy.

Secure Your VAT Registration Effortlessly with Filings.ae! 

To streamline the process of VAT registration and ensure compliance with UAE tax laws, consider leveraging the expertise available at Filings.ae. By using our services, you can efficiently obtain your Tax Registration Number (TRN) and manage all aspects of VAT registration without hassle.

Filings.ae provides tailored guidance and support, making the registration process straightforward and stress-free so you can focus more on growing your business while staying compliant with tax obligations.