VAT Registration Service in the UAE
Any person engaging in economic activities in UAE is classified as a taxable person. To ensure compliance with the tax regulations, such individuals or entities are required to register for Value Added Tax (VAT) with the Federal Tax Authority (FTA) within the stipulated timeframe. This registration process results in the issuance of a UAE Tax Registration Number (TRN). It is mandatory when the total value of taxable supplies made by the individual or entity exceeds the registration threshold as defined in the VAT Law.
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VAT Registration Eligibility and Documents
Required Documents
- Trade License
- Emirates ID of Owner/ Partners/ Shareholders
- Passport of Owner/ Partners/ Shareholders
- Company Memorandum and Articles of Association
- Bank Account Details
- Monthly Turnover Declaration
- Supporting Financial Documents
- Customs Details (If Applicable)
- Power of Attorney (If Applicable)
- Any Other Documents Required by the FTA
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VAT Registration's Impact on Business
- Registered businesses have the legal right to charge VAT on their taxable supplies of goods and services.
- VAT registered entities can claim Input Tax Credit on the VAT they have paid on their purchases. This credit is deducted from the VAT liability on their sales.
- Registered businesses are responsible for remitting the collected VAT to the government, ensuring compliance with tax regulations.
- VAT registered entities are required to periodically file VAT returns, providing details of their taxable transactions.
Non-Resident VAT Registration
Any person who doesn’t own a fixed establishment or maintain a place of establishment in the UAE, and who doesn’t usually reside in the country, must register for Tax if they supply goods or services in the UAE, particularly when no other person in the UAE is responsible for paying the due tax on those supplies. It should be noted that the registration threshold does not apply to non-residents, and they must register even if making just a single supply.
Exception from Registration
- The Federal Tax Authority allows individuals or entities to apply for an exception from mandatory VAT registration in the UAE if their annual turnover consists of 100% supplies taxable at a zero rate of VAT, as specified by the law.
- To seek an exception, applicants must submit their request to the authority. If the authority is satisfied that the conditions for exemption from registration are met, it will issue a notice confirming the exemption.
UAE VAT Registration Best Practices
Frequently Asked Questions
Who is required to register for VAT?
UAE-resident businesses making taxable supplies must register for VAT if their taxable supplies and imports over the past 12 months exceeded, or are expected to exceed in the upcoming 30 days, the mandatory registration threshold of AED 375,000. Non-resident businesses supplying taxable goods in the UAE also must register for VAT, regardless of the value, if no other person in the UAE is responsible for the due tax on these supplies.
Who may register for VAT?
UAE-resident businesses making taxable supplies can voluntarily register for VAT if the value of their taxable supplies, imports, or taxable expenses in the past 12 months exceeded, or is expected to exceed within the next 30 days, the voluntary registration threshold of AED 187,500.
Can businesses with zero turnover register for Tax Registration Number (TRN)?
Yes, a business can voluntarily register for VAT if its expenses subject to VAT exceeded AED 187,500 in the past 12 months, OR if they reasonably estimate that their turnover or expenses subject to VAT will exceed AED 187,500 in the upcoming 30 days.
This voluntary registration option is intended to allow start-up businesses with no turnover to register for VAT.
Why should businesses register for VAT?
The primary reasons why VAT Registration is considered essential include:
- Many prominent UAE businesses prefer not to engage with companies that are not VAT-Registered.
- The company can reclaim the VAT paid on business-related expenses.
- Registration with the Federal Tax Authority enhances the company’s profile.
- It positions the company favorably in a mass market.
- It prevents administrative penalties.
Is there any penalty associated with Non-Registration/ Late VAT Registration?
Yes, anyone required to register for VAT must submit a registration application to the FTA within 30 days of becoming eligible to avoid a late registration penalty. Failing to do so will result in a penalty of AED 10,000 as specified in the Tax Law.