UAE VAT Registration: Check if It’s a Requirement

Is VAT registration a requirement in the UAE? The UAE did not have a value-added tax in place until very recently, but the short answer is yes if your business meets a few pieces of criteria. Many factors go into what your VAT registration for a new or already-existing company in the UAE needs. Let’s have a look. 

VAT Registration Requirements

The UAE’s value-added tax (VAT) went into effect in 2018 and applies to all goods and services sold domestically in Emirati territory at a standard rate of five per cent. Every step of the supply chain will see a five per cent charge, with end-consumers assuming the ultimate brunt of these added costs. On the other hand, businesses are in charge of accounting and collecting it to submit to the authorities. Where can you find VAT? It can be on services you find at hotels, commercial buildings or even food. There are some exceptional cases where you won’t see the imposition of VAT. Some provisions allow for a zero rate (where VAT is zero per cent) or for an exemption where you needn’t impose VAT. 

Why did the Emirati government begin imposing VAT so recently? They sought to create a new source of revenue to support government-funded services like infrastructure, education and healthcare that both foreign residents and Emirati citizens enjoy. That did not serve as the only benefit; VAT also contributes towards the UAE’s efforts to diversify the national economy beyond oil and allow for monetary resources to make investments in their future economy. 

So, whose VAT registration is mandatory and whose is optional? The critical number to recall here is 375,000 AED (£73,327.17 when writing this article) as the VAT registration requirements dictate that all enterprises with their taxable imports and supplies exceed this threshold. If you run the numbers and go over them, you must apply for VAT registration. 

Let’s say that your taxable supplies and imports don’t come even close to the 375,000 AED figure. The following number to remember is the voluntary VAT threshold of 187,500 AED (£36,658.88 when writing this article). If your amount is between the voluntary VAT registration threshold but below the mandatory limit, you can opt to register for VAT. If you’re below the point, you can also go through the VAT registration process.

The benefits of VAT registration

If you’re underneath the mandatory threshold, you might wonder why you even bother going through the UAE Federal Tax Authority’s VAT registration process. There are a few things you’ll automatically receive through going through VAT registration. First, all businesses that register for VAT get a Tax Registration Number (TRN) after completing the process. Many consumers deem a company with a Tax Registration Number (TRN) as more reputable and give them confidence whilst dealing with you. 

Another perk to VAT registration for a new company in the UAE is that many firms don’t like working with a firm sans a TRN number. This phenomenon is especially true with long-established entities. You’ll certainly benefit from getting to issue proper invoices and have the validation you’re a serious business. Finally, as your business grows, you may not know if your supplies and imports end up going over the critical VAT threshold figures. Rather than not knowing and getting into a lot of trouble with the Federal Tax Authority, VAT registration gives you the peace of mind that you’ll avoid fines or penalties you could potentially miss if not registered. 

How to apply for VAT registration in the UAE

The VAT registration process happens online, but there are some documents that you have to upload to the application for the Federal Tax Authority (FTA) to review for approval. Some of these required pieces have to get submitted in Arabic, and if you don’t include all the required documents, you could find your acceptance slowed down for unnecessary reasons. Using expert tax practitioners like Europe Emirates Group ensures you can avoid these potential pitfalls. 

Documents required for VAT registration in the UAE

The documents you’ll need ready for submission to complete the VAT registration process in Dubai include:

• A valid copy of your active trade licence (make sure your company renewal didn’t expire!)

• Copies of the company owners’ passports and Emirates ID

• Company contact details

• Memorandum of Association (if you’re a sole establishment, this is optional)

• Contact details for the involved people

• Bank details

• Information regarding other entities that the owners may have

• Signed and stamped income statements from the last 12 months

• A forecast detailing revenues and expenses for the thirty days after applying

Depending on your company, you may also need to have more information on hand. The application will ask you if you’re importing or exporting goods. Beyond that, if you’re dealing with any customs departments, you must have the VAT Registration Letter ready to upload. They’ll also want to know if you’re doing business with any other GCC member nation. If you represent more than one entity, you can opt for VAT group registration for all your entities or have separate tax numbers for the individual enterprises. 

Once the Federal Tax Authority approves your VAT registration, you will get assigned a TRN that you can check on the online portal. Once you have a TRN, you can file your VAT returns online.

How often must you file VAT returns?

Unlike many other tax procedures that you only file every year, VAT returns happen more frequently. If your business has an annual turnover of at least 150 million AED (£29,308,612.14), you must file monthly VAT returns. If your annual turnover is under this figure, the interval is every quarter. Every type of business has a specific ”tax period” that dictates the deadlines for these filings to the Federal Tax Authority. Should you not do this on time, you can get subject to fines. 

Need some help with VAT registration? 

VAT registration requires several moving parts that start with expert advice to find out if you must go through this process or if voluntary registration suits you. Fortunately, Europe Emirates Group offers end-to-end VAT registration and compliance services for UAE-based businesses. Not only will we ensure you have your required documents; we’ll also assist you in adapting your business model to support it. This approach includes spearheading VAT implementation in your organisation, updating your accounting and bookkeeping to align with registering and filing VAT and preparing your monthly or quarterly returns. Are you ready to trust in the experts to ensure your returns get filed timely? Speak to us today to get started.

Written by
Adrian Oton

CEO, Europe Emirates Group