If you plan to launch a business in the UAE, you may need to register for VAT (Value Added Tax) first. Companies that meet the set criteria will be required to register for VAT. The Dubai government has set a threshold of AED 375,000 for annual revenue before businesses must register for VAT. So, how does VAT registration in the UAE work for businesses?
In this blog post, we’ll provide an overview of what’s required to register for VAT in the UAE and how to go about it.
DOES VAT APPLY TO MY BUSINESS?
Before a business can apply for UAE VAT registration, they should first determine if their company is required to pay VAT. All businesses that make taxable supplies and exceed the mandatory registration threshold are required by law to register for VAT.
Businesses must apply for a UAE VAT registration if their taxable supplies and imports exceed the following amounts:
– AED 375,000 per annum
– AED 187,500 per six months (semi-annual period)
If your business doesn’t meet either of the criteria above, you’re not legally required to register for VAT in Dubai. However, you may still want to register voluntarily if it’s beneficial for your company. For example, some businesses choose to register for Dubai VAT even if they don’t meet the requirements so they can reclaim VAT on business expenses.
WHAT IS INCLUDED IN TURNOVER FOR VAT TAX IN THE UAE?
Turnover for VAT in the UAE includes taxable supplies of goods and services made by businesses, as well as imports of goods into the UAE.
Taxable supplies are classified as either standard-rated or zero-rated. Standard-rated supplies are taxable at a rate of five percent and include most goods and services supplied in the UAE. Zero-rated supplies are not subject to VAT but businesses can reclaim any VAT paid on associated expenses.
Some examples of taxable supplies that are subject to the standard five percent rate include:
– Sales of goods and services within the UAE
– Sales of goods and services exported from the UAE
Zero-rated Items:
– Food items
– Healthcare
– Education
HOW TO REGISTER FOR VALUE-ADDED TAX IN THE UAE
Now that you know whether or not your company is required to register for VAT, we’ll go over the steps of how to actually register. The Dubai government has set up an online portal where businesses can begin the VAT registration process.
To register for VAT in Dubai, businesses must have a Trade License issued by the Dubai Department of Economic Development (DED). If your business is based in another emirate, you’ll need to obtain an equivalent trade license from the relevant authority in that emirate.
In addition, businesses must have a Commercial Registration Certificate (CRC) issued by the Dubai Chamber of Commerce and Industry (DCCI). The CRC is also sometimes referred to as an Emirates ID.
To apply for a Trade License, businesses will need to submit the following documents:
– Application form
– Dubai visa copy
– Passport copies of the business owner(s)
– No Objection Certificate (NOC) from the current sponsor
– Memorandum of Association (MOA) or Articles of Association
The Dubai Chamber of Commerce and Industry (DCCI) will issue a Commercial Registration Certificate (CRC), also known as an Emirates ID, once the trade license application has been approved.
Businesses will need to provide their bank account details and have a registered office address in the UAE to complete the VAT registration process. The VAT registration application can be submitted online through the Federal Tax Authority (FTA) website.
Once the application has been approved, businesses will receive a Tax Registration Number (TRN). The TRN must be quoted on all invoices issued by the business. Businesses are required to file VAT returns on a quarterly basis and pay any taxes due to the FTA.
It’s important to note that businesses must keep accurate records of their income and expenditure in order to prepare their VAT returns accurately. The FTA may carry out audits of businesses to ensure compliance with VAT regulations.
HOW TO CHECK VAT REGISTRATION?
You can always review the progress of your VAT registration application by logging into the Dubai Trade portal using your smart card. The status of your application will be displayed on the screen.
WHAT IF I NEED TO AMEND MY VAT REGISTRATION IN THE UAE?
All amendments you make after registering must be updated on your records within 20 business days, including:
– Changes to your business activity or
– The addition of new branches or outlets.
To do so, you’ll need to log in to the Dubai Trade portal using your smart card and select the “Update Profile” option. You can also contact the Dubai Chamber of Commerce and Industry for assistance.
PENALTIES FOR NOT REGISTERING FOR VAT IN THE UAE
If businesses fail to register for VAT when they’re required to do so, they may be subject to penalties. These can include administrative fines of AED 20,000 and/or imprisonment for a period not exceeding six months.
It’s important to note that even if a business is not yet required to register for VAT, it may still choose to do so voluntarily. This can be beneficial as it allows businesses to recover any VAT paid on expenses incurred prior to registration.
Voluntary registration for VAT must be applied for using the Dubai Trade portal. The application must be submitted at least 60 days before the date on which the business wishes to register.
Businesses that are already registered for VAT in another GCC country can apply for voluntary registration in Dubai without having a trade license or Commercial Registration Certificate (CRC).
To apply, businesses will need to submit the following documents:
– Application form
– Passport copies of the business owner(s)
– No Objection Certificate (NOC) from the current sponsor
Registering for VAT in the UAE is a relatively straightforward process, but there are a few things businesses need to keep in mind. Make sure you have all the required documents ready before beginning the application process and be aware of the penalties for not registering when you’re supposed to.
If you have any questions about VAT registration in Dubai, feel free to contact Azco Real Estate. Our experienced team will be more than happy to assist you.
