VAT Registration

VAT registration is the essential gateway to ensuring business remains fully compliant with UAE tax regulations. When a company or individual exceeds the prescribed turnover threshold or engages in taxable supplies, it becomes mandatory to register for VAT with the Federal Tax Authority (FTA). This registration enables businesses to legally collect VAT from customers, claim input VAT credits, and file VAT returns in accordance with UAE law.

Failure to register on time can result in hefty fines, backdated tax liabilities, and even business suspension. At Filings.ae, we specialize in simplifying the VAT registration process in the UAE, guiding you through every step - from document preparation and portal submission to approval and ongoing compliance.

Introduction to VAT Registration in UAE

Being registered under the VAT law signifies that a business is officially recognized by the government as a supplier of Goods and Services and is authorized to collect VAT from customers, remitting the collected amount to the government. VAT registration UAE grants businesses specific privileges, allowing them to:

• Charge VAT on the taxable supply of goods/services.
• Claim Input Tax Credit(ITC) on VAT paid for purchases, deducted from the VAT liability on sales.
• Make payments of VAT to the government.
• Periodically file VAT returns.

In addition to these benefits, all registered businesses must align their reporting structures to comply with requirements. This includes maintaining accurate and updated books of accounts, and documentation such as tax invoices, credit notes, debit notes, and records of both inward and outward supplies.

Obtaining VAT registration is the initial step toward transitioning businesses into the VAT era.

Who should Register under VAT?

Not all businesses are obligated to register under VAT. Only those businesses that surpass the defined annual aggregate turnover threshold are liable for VAT registration. Depending on this threshold, businesses will either be compelled to register, have the option to apply for registration, or may seek exemption from VAT registration.

On this basis, VAT registration in the UAE can be categorized into the following:

• Mandatory VAT Registration
• Voluntary VAT Registration
• Exemption from VAT Registration

Types of VAT Registration UAE

Businesses exceeding either the mandatory or voluntary registration thresholds in the UAE may be obligated or have the option to register for VAT.

Mandatory VAT Registration UAE

A business is obligated to register for VAT in the UAE under the following circumstances:

• In the past 12 months, its taxable supplies and imports exceeded the mandatory registration threshold.
• In the next 30 days, the business anticipates that the value of its taxable supplies and imports will exceed the mandatory registration threshold.

The mandatory registration threshold is set at AED 375,000.

Voluntary VAT Registration UAE

A business has the option to apply for VAT registration voluntarily if it doesn't meet the mandatory registration criteria. The criteria for voluntary registration are as follows:

• If the total value of taxable supplies, imports, or taxable expenses in the preceding 12 months surpasses the voluntary registration threshold.
• If the business foresees that the total value of taxable supplies, imports, or taxable expenses will exceed the voluntary registration threshold within the next 30 days.
• The voluntary registration threshold is set at AED 187,500.

Taxable Supply

For determining registration obligations, a taxable supply in the UAE refers to goods or services provided by a business, subject to a 5% or 0% tax rate. Imports are also considered if they would be taxable if made within the UAE.

UAE VAT Return

Upon registering for VAT in the UAE, it is mandatory to submit your VAT return and make associated VAT payments within 28 days from the conclusion of your tax period.

Tax Registration Number (TRN)

After applying for VAT registration and successfully undergoing verification, the Federal Tax Authority of the UAE will issue the VAT number, commonly known as the Tax Registration Number (TRN). This unique TRN is expected to have 15 digits and serves as a distinct identifier for the registered entity in all tax-related transactions.

Introduction to VAT Group

If a company has multiple entities engaged in trade with each other, it is possible to register as a VAT group. Under group registration, all entities within the VAT group are considered a single entity for VAT purposes. Transactions or supplies between members of a VAT group are treated as internal and are not subject to VAT. However, supplies made by the VAT group to entities outside the group are governed by standard VAT rules.

When a company opts for VAT group registration, it is assigned a single Tax Registration Number (TRN), and the group is required to file a consolidated VAT return, streamlining the reporting process for the grouped entities.

Required Documents for VAT Registration UAE

When applying for UAE VAT registration, it is necessary to prepare the following information in an appropriate format

• Valid trade license
• Passport/Emirates ID of the authorized signatory
• Proof of authorization for the authorized signatory
• Contact information
• Bank letter validating the bank account details
• Additional documents based on the registration basis may include:
• For taxable supplies
• Audit report (audited or non-audited financial statement)
• Self-prepared calculation sheet outlining details to calculate taxable/zero-rated supplies based on financial records
• Revenue forecast with evidence (example - Local Purchase Order or Contract)

The authorized signatory should sign and stamp on the letterhead of the entity the monthly turnover declaration for specified periods

Supporting financial documents

• For taxable expenses
• Audit report, audited or non-audited financial statement
• Expense budget report

Other General Documents:

• Articles of Association/Partnership Agreement
• Certificate of Incorporation
• Documents indicating ownership information of the business
• Customs details
• Power of Attorney documents
• Documents supporting the registration of a club, charity, or association
• A copy of the Decree
• Other relevant documents providing information about your organization, including its activities and size
• Scannable copies of the Emirates ID and passport of the owner, manager, and senior management
• A scanned copy of the land/property title deed

Penalty for Non-Compliance

Failure to comply with VAT regulations in the UAE can lead to stringent and costly penalties for a business. Hence, it is important for all businesses to engage a professional team of tax professionals to help them navigate VAT compliance in the UAE. Filings.ae can help your business manage VAT compliance.

The following are some of the penalties applicable under VAT Regulations in the UAE.

• AED 10,000 penalty for failure to apply for VAT registration within the time limits specified in the VAT regulations.
• AED 1,000 monthly penalty (not exceeding AED 10,000) for failure of a business having VAT registration and not submitting deregistration application within the timeframe, if applicable.
• AED 5,000 penalty for not displaying prices inclusive of VAT.
• AED 2,500 penalty (for each instance discovered) for failure to issue a tax invoice / tax credit note or an alternative document when making a sale.
• AED 2,500 (for each instance discovered) for failure to comply with the conditions and procedures regarding the issuance of electronic tax invoices and electronic tax credit notes.

Procedure to Apply for VAT Registration in Dubai

VAT registration is seamlessly conducted through an online process. Businesses or individuals desiring VAT registration must initiate the procedure by creating an account on the Federal Tax Authority (FTA) web portal. This entails providing essential information to complete the registration.

For a smoother and expert-guided experience, Filings.ae offers assistance throughout the VAT registration process, ensuring compliance and ease for businesses in UAE. We guide you through the necessary steps, from creating an account on the Federal Tax Authority (FTA) web portal to providing the essential information required for registration.

VAT Deregistration

A VAT-registered individual in the UAE has the option to apply for deregistration if they meet any of the following conditions:

• The registered person no longer engages in taxable supplies.
• The value of their taxable supplies falls below the voluntary registration threshold of 187,500 AED over a period of 12 consecutive months.
• Over the course of a year, the value of their taxable supplies falls below the mandatory threshold of 375,000 AED.

It's important to note that a person who voluntarily registers for VAT must remain registered for at least 12 months before being eligible to apply for deregistration.

Seamless UAE VAT Registration through Filings.ae

Filings.ae is your trusted partner for seamless and efficient VAT registration in the UAE. Our expert team navigates the complexities of the registration process, ensuring that your business is in compliance with all regulations. We guide you through the necessary steps. With Filings.ae, you can experience a hassle-free VAT registration process, allowing you to concentrate on your core business activities while we handle the intricacies of compliance, ensuring that your business operates smoothly within the UAE's taxation framework.