In 2018, the UAE introduced a Value Added Tax (VAT) regime that requires businesses to register for VAT once they exceed the threshold for mandatory registration based on taxable supplies and imports.

VAT Registration Process

Businesses must complete an online VAT registration application through the Federal Tax Authority (FTA) website. This application requires providing details about the company, its activities, and financial information. Upon submission, the FTA will verify and process the registration.

Once registered, businesses receive a VAT registration certificate, which includes a tax registration number. At this point, the business must comply with FTA regulations, including charging VAT on taxable supplies, filing VAT returns, and issuing VAT invoices.

Who Needs to Register for VAT in the UAE?

VAT registration is required when a company’s total taxable income exceeds AED 375,000. Once this threshold is crossed, businesses must either register for VAT or file for an exemption, depending on the circumstances.

VAT Taxation Overview

Understanding VAT is crucial for businesses. Below are the key VAT categories:

• Standard VAT Rate (5%): Applied to most goods and services.

• Zero-rated Supplies (0%): Taxed at 0%, allowing businesses to recover input VAT on related expenses.

• Exempted Supplies: No VAT is charged, and input VAT recovery is not allowed.

• Out-of-Scope Supplies: Transactions that fall outside the scope of UAE VAT, not subject to VAT.

VAT Registration Categories

VAT registration in the UAE is categorized as follows:

• Obligatory VAT Registration: Businesses must register if their annual turnover exceeds AED 375,000. Registration should be completed within 30 days of exceeding this limit.

• Voluntary VAT Registration: Businesses can voluntarily register if their turnover exceeds AED 187,500. This also needs to be done within 30 days.

• VAT Registration Exemption: Companies with turnover below AED 187,500 or that only supply goods and services subject to 0% VAT may apply for an exemption.

Required Documents for VAT Registration

To register for VAT in the UAE, businesses need to provide the following documents:

• Trade license and/or commercial registration certificate

• Incorporation certificate (for corporate entities)

• Passport and Emirates ID of the business owner(s)

• Details of authorized signatories

• Contact details for shareholders and authorized persons (email and UAE mobile number)

• Bank account details

• Financial statements and records

• Details of business activities and expected turnover

• Customs authority code (if applicable)

• Other relevant documents

It is advisable to consult with the FTA or a tax expert to ensure all documentation is accurate.

VAT Registration Deadlines

The VAT registration deadline depends on when a business reaches the AED 375,000 threshold:

• Obligatory VAT Registration: Must be completed within 30 days of exceeding the AED 375,000 turnover.

• Voluntary VAT Registration: Must be completed within 30 days of exceeding AED 187,500 turnover.

Penalties for Late VAT Registration

Failure to register for VAT within the specified deadline results in penalties:

• AED 10,000 fine for late registration.

• AED 1,000 per month (up to AED 10,000) for missing the deregistration deadline.

• Late payment fines: 2% of the unpaid amount immediately, 4% after seven days, and a daily 1% penalty after one month, potentially reaching up to 300% of the tax owed.

Turnover Calculation for VAT Registration

Turnover calculations include:

• Taxable Supplies: Goods and services subject to VAT at the standard or zero rate.

• Exempt Supplies: These are not included in the turnover calculation for VAT registration.

VAT Registration Application Procedure

Follow these steps for VAT registration:

1. Determine eligibility: Confirm if your business qualifies for obligatory or voluntary VAT registration.

2. Prepare documents: Gather all necessary documents for VAT registration.

3. Register via FTA portal: Create an e-service account and complete the VAT registration form on the FTA portal.

4. Submit the application: The FTA will process the application and may request additional information.

5. Receive VAT certificate: Once approved, you’ll receive a VAT registration certificate and tax registration number (TRN).

VAT Group Registration in the UAE

Companies can register as a VAT group if they meet certain conditions, such as:

• Having strong organizational, economic, and financial ties (e.g., under common ownership or control).

• Being established in the UAE.

• Designating a representative member to submit the VAT group registration application to the FTA.

Post-VAT Registration Checklist

To stay compliant, businesses must:

• Charge VAT correctly: Apply the 5% rate to taxable supplies.

• Maintain accurate accounting: Keep detailed records for 5 years to facilitate VAT filing and reclaiming input tax.

• Meet deadlines: Ensure VAT returns and payments are submitted on time.

• Stay updated: Regularly check for changes in VAT regulations from the FTA.

• Consult experts: Work with tax professionals to avoid errors, fines, and to free up time for business growth.

VAT Registration Compliance with Visakingsdubai

At Visakingsdubai, we simplify your business’s financial management by providing reliable accounting and bookkeeping services. Our team ensures that your VAT and tax registration, along with reporting, is accurate and timely, so you stay compliant with UAE regulations.

By outsourcing your accounting to Visakingsdubai, you won’t need an in-house accountant. Our experienced professionals use advanced software to manage your financial obligations, saving you time and resources while ensuring full compliance.

Need help with VAT registration? Contact our team today for a free VAT consultation!