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 your registered email address asking you to verify your email address within 24 hours.
- Finally, your e-service account is created and you can login with your username and password.
Provide accurate Information and Documents
In your official FTA account, you noticed a button in the dashboard seen as ‘Register for VAT’. Once you click on that, you will get a complete ‘Getting Started Guide’ on value-added tax. This comprehensive guide will assist you with the documents required for VAT registration procedure in UAE. There is specified information and documents required for VAT registration. Below we mention them briefly:
- Information and details about the applicant
- Contact details of the company.
- Bank account details.
- Business relationships.
- About VAT registration
- Review and submission.
All of these should be valid and authentic otherwise the application may be rejected, delayed, and penalized. In the case of any further details required by FTA, the applicant will receive an email notification.
Amending the Approved VAT Registration Form
If a company’s tax records change during the registration process for VAT, this additional benefit is available to them. The applicant may update the records within 20 working days of occurrence. You must inform FTA about your amended tax records.
Simply click on the ‘Edit’ or ‘Amendment’ button, to update the below-mentioned information.
- Business activities of the applicant section
- GCC Activities section
- Customs Registration Information section
In this process, FTA may ask you for more details to approve the amendments in your VAT application.
What are the VAT Registration Fees in UAE?
The VAT registration procedure in UAE is free because it is all done online on the official portal of FTA. To request an attested registration certificate, the applicant must pay Dhs500.
Late Registration Penalty Payment
In the United Arab Emirates, the Late Registration Penalty Payment is AED 10,000 according to Cabinet Decision No. (49) of 2021. So, it is always advisable to register within the deadline of 20 days for crossing the mandatory threshold VAT registration in Dubai.
Professional VAT Registration Services in Dubai
VAT registration services are mandatory for all taxable businesses operating in Dubai. The above-mentioned points and details help business owners, CFOs, and CEOs in VAT registration in UAE. Although, a little bit of inaccuracy in your VAT application can lead to delays and heavy fines. The best possible solution is to outsource VAT registration services in Dubai and get your business VAT compliant under FTA standards.
Next Article: How do you Get the Best VAT Consultants in Dubai?