Maintain your tax compliance through Filings.ae platform at an affordable price. Get support from Experienced Accountants for bookkeeping, financial statement preparation, VAT and Corporate Tax filing.
Maintain your tax compliance through Filings.ae platform at an affordable price. Get support from Experienced Accountants for bookkeeping, financial statement preparation, VAT and Corporate Tax filing.
Maintain your tax compliance through Filings.ae platform at an affordable price. Get support from Experienced Accountants for bookkeeping, financial statement preparation, VAT and Corporate Tax filing.
Manage your business and track services |
Manage your business and track services |
Manage your business and track services |
The UAE government sets a specific turnover threshold limit for VAT registration. Businesses with a turnover exceeding AED 375,000 must register for VAT in UAE. The taxable turnover for VAT registration will be determined by the following factors - taxable supplies, zero-rated supplies, imports, and reverse charge supplies. This article helps you better understand the UAE VAT turnover threshold and how to calculate it.
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VAT registration in the UAE is a process by which businesses exceeding a specific annual turnover threshold or opting to register voluntarily must comply with Value Added Tax (VAT) regulations. This implies collecting VAT on taxable supplies of goods and services, maintaining VAT records, filing VAT returns, and paying VAT to the Federal Tax Authority (FTA).
The UAE operates with two key VAT turnover thresholds:
Below, we have provided the VAT turnover threshold calculation formula and explained each element to help you understand how the calculation works.
Here is the simplified to calculate VAT taxable turnover:-
Taxable Turnover = Taxable Supplies + Zero-Rated Supplies + Imports + Reverse Charge Supplies
Let's consider a company based in the UAE that sells electronics and offers occasional IT consultancy services. In the past year, here's a breakdown of their revenue:
Description | Amount (AED) |
Taxable Supplies (Electronics) | 150000 |
Taxable Supplies (IT consultancy) | 50000 |
Zero-Rated Supplies | 10000 |
Imports (Taxable goods) | 40000 |
Reverse Charge Supplies | 0 |
Now, to calculate their taxable turnover for VAT registration purposes, we simply add up all these components:
Taxable Turnover = AED 150,000 (Electronics) + AED 50,000 (IT consultancy) + AED 10,000 (Zero-Rated) + AED 40,000 (Imports) + AED 0 (Reverse Charge)
Taxable Turnover = AED 250,000
In this scenario, since the company's taxable turnover (AED 250,000) falls below the VAT registration threshold in the UAE, it doesn't need to register for VAT. However, it can register for VAT voluntarily since it is above AED 187,500.
While not mandatory for businesses below the AED 375,000 threshold, voluntary VAT registration can offer advantages such as:
However, voluntary registration also comes with additional responsibilities:
Learn more: Benefits of Obtaining VAT registration in UAE
Understanding VAT turnover threshold calculation is vital for businesses operating in the UAE. By calculating your taxable turnover and considering the implications of mandatory or voluntary registration, you can ensure compliance with UAE VAT regulations. Consulting with Filings.ae Tax professionals can help you make informed decisions regarding your VAT registration status.
Have your UAE business reached the AED 375,000 threshold? Streamline your VAT registration with Filings.ae! - Get started today!
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