UAE belongs to the GCC group and promises to implement all necessary tax policies to ensure investors that setting up a business in UAE is a worthwhile endeavor. The important announcement is that all companies operating in the United Arab Emirates must record their financial records and transactions to obtain VAT compliance as per FTA standards. Value-added tax (VAT) is a type of consumption tax, which is implied in almost 150 countries around the globe. The VAT is subjected at each stage of the supply chain that is bought and sold. The relevant authorities and the Ministry of Finance imposed several VAT laws and regulations on taxable businesses. There is a specified threshold or turnover limit required to apply for VAT registration in UAE.
Purpose of VAT
The VAT was implemented on 1st Jan 2018 in the United Arab Emirates. This indirect tax is collected for increasing the government budget. That ultimately benefits the residents in the form of public services and facilities. VAT aims to stabilize the economy of the country and provide advantages to the citizens of UAE. Thus, the Emirates governments implement fair VAT legislations on each eligible individual and business. Before this, UAE Federal was dependent upon the income generated by oil and carbohydrates, but this 5% VAT rate proves a new source of income for the government.
Does VAT Subject to All Types of Businesses?
The value-added tax is implied on businesses operating on the mainland and in the free zones of UAE. Taxable businesses that meet the minimal turnover threshold requirement can apply for VAT registration. Here are the list of List of Documents Required for VAT Registration in UAE.
- The UAE cabinet stated that if the taxable supplies and imports of the business crossed the threshold of AED 187,500 in the last twelve months, then they can claim for voluntary VAT registration in UAE.
- If a business’s turnover exceeded the threshold AED 375,000 in both taxable supplies and imports, then mandatory VAT registration is required.
A Complete VAT Registration Procedure in UAE
The VAT registration procedure in UAE is not so simple, as you need expert guidance and information regarding your financial transactions to be successful. It is essential for tax registered businesses to calculate the VAT that they charge to consumers and the VAT paid to the government regularly. Although this step-by-step process helps you with VAT registration services in Dubai, just follow them:
Set up an e-Services account on FTA Portal
The foremost step is to create an e-service account or login into an existing account on the official Federal Tax Authority website. The creation of an account is not difficult as it is similar to other social media platforms. It just asks you some basic and valid information such as:
- Enter your email address, a strong and unique password, fulfill security code and question, complete alphanumeric test and lastly agree to terms and conditions.
- After clicking the “Sign up” button, a message is sent to