Since it was announced that UAE implemented VAT on Value Added Tax (VAT) 1 January 1st, 2018, business owners must follow the rules, which include UAE VAT Registration and tax filings.
Businesses operating in UAE should ensure that VAT is collected correctly and adequately accounted for so they can pay the Federal Tax Authority (FTA).
UAE VAT registration means that government officials recognize your business as a legitimate business to take VAT from your customers and then transfer this to the government.
As a business owner, you must know all the essential aspects of VAT in the UAE.
There is a step-by-step guide.
The VAT tax is levied and imposed on the exchange of services and goods applied at every stage in the supply chain. The Government of UAE sets this indirect tax at a nominal rate of 5 percent on most businesses and interests. However, food, education, and healthcare items are exempt from VAT.
If you need to be UAE VAT registered is contingent upon the turnover per year of your business.
Exclusive from UAE VAT Registration Supply value less than Dh187,500
Voluntary VAT Registration Supply of goods between Dh187,500 to Dh375,000
Mandatory VAT Registration The value of supplies that exceed Dh375,000
After your UAE VAT Registration is approved, your registered company will receive a unique Tax Registration Number (TRN). The VAT invoices on all VAT invoices will include the Tax Registration Number.
UAE mainland businesses, as well as free zone businesses, are taxed on VAT. The only ‘designated zones’ designated by Cabinet members are outside the UAE VAT taxation. The transportation of goods within the zone is exempt from tax.
It typically takes between 3 and 5 days for the Registration of VAT to be processed.
VAT-registered companies (taxable individuals) must file an annual VAT return to the FTA.
A VAT return summarizes the supplies and purchases of a taxpayer during the tax year to calculate the tax liability of VAT.
You can file your VAT return online every month or every quarter by visiting FTA’s official website – https://www.tax.gov.ae/.
Tax returns should be filed on time, usually by the 28-day deadline. The tax period is the time in which taxes are due and due. The tax period:
* Monthly for businesses with annual revenues over Dh150 million or greater.
* Quarterly rate for companies with an annual turnover of less than Dh150 million
As with other business revenues, the VAT you collect from customers is not an element of your business’s revenue. The VAT that is collected is known as VAT liability, & it has been paid back to the government of the UAE.
Vat liability refers to the gap between the output tax to be paid (VAT applied to supplies of services and goods) and the tax on input (VAT paid on purchases) which is recoverable for a particular tax time.
If the output tax exceeds the input taxes, they must be paid to FTA. If there is excess input tax above output tax, the taxpayer must recover the extra tax and apply it to future payments due to FTA.
You’ll need to provide duplicates of these documents to be eligible for UAE VAT Registration.
· Certificate of registration or incorporation;
· Trade license
· Passport and visa, or Emirates ID of director/manager
· The partnership agreement or memorandum association, or another document that provides information on the business’s ownership;
· The profile of the Director of the company who was appointed;
· Bank account details;
· Contact details;
· Physical office space;
· List of partners or directories of business in the UAE over the last five years
The Federal Tax Authority would also need to declare the following:
· The actual or estimated value of financial transactions;
· Business activities that the applicant has registered;
· Information on the anticipated revenue of the company for the next thirty days;
· The turnover of the business over the previous twelve months (supporting documents are required);
· Information about the business’ anticipated exempt supply;
· Information about the company’s Exports and imports;
· Customs Registration Details;
· The business activities that take place in the GCC
The taxpayer or VAT-registered company is also required by the tax authorities to keep the following records:
· Tax invoices and any other document pertinent to the receipt of products or services.
· Notes on the tax credit, along with any other documents that the company receives about the acquisition of products or services
· Record of tax-deductible materials received or made
· Tax invoices, as well as any other document that is issued concerning services or goods;
· Credit notes for tax purposes and any other type of document issued to purchase items or services
· Documents of services or goods that are disposed of or used by the company for purposes not connected with the business, as with taxes paid in connection with such;
· Record of the imports and supply of goods or other products;
· Record of adjustments or corrections made to tax invoices or any other account;
· Documents of goods or other products exported to any other country
Tax records must be kept by a tax-paying individual and include the following details:
· Taxes recoverable on imports and supplies;
· Taxes that are recoverable after adjustment or correction of error;
· Tax due following adjustment or modification of error;
· Taxes owing on all tax-deductible items
UAE VAT Registration Process
If you have your soft copies of these documents, you’re in good shape to start the registration procedure.
First of all,
Sign up at the e-service and then establish an account
Input the UAE VAT Registration form
FTA (Federal Tax Authority) authorized e-service account is obligatory to register VAT. It is simple to set up an account through their official site.
The rates for VAT in the UAE differ for each product. The standard rate for the government is 5%. You should charge this amount unless the product or service is in”zero-rated” or “zero-rated” or VAT exemption.
Zero-rated rates are available on tax-exempt products; however, the buyer is not liable for VAT. Your VAT account must record and report zero-rated VAT transactions too.
Certain services and products, such as the construction of residential structures and land and financial services, are exempt from VAT.