Do you have following questions regarding VAT?
- Is VAT registration compulsory?
- Do I have to be VAT registered?
- Is VAT a legal requirement?
- How do I register for VAT in UAE?
- Does it cost to register for VAT in UAE?
- Who is exempted from VAT in UAE?
- What happens if you don’t get registered for VAT in UAE?
- How can I find my VAT registration number i.e. TRN ?
- How do I no if my business is registered with the FTA? Look no further we will explain all that is required for you to know about VAT registration in UAE.
Understand your obligation/responsibility regarding VAT.
- VAT since its implementation in 2018 is a legal obligation on meeting certain criteria set by Federal decree law (8) of 2017 and regulated by Federal tax Authority (FTA ) in united arab emirates (UAE).
- To fully comply with the UAE VAT legislation it is essential that businesses make every effort to align their business model to VAT requirements of the business.
What is VAT?
VAT is a consumption tax and is applied at each step of the supply chain as the value added on each stage of supply chain. End consumers generally bear the VAT cost while registered businesses collect and account for the tax, in a way acting as a tax collector on behalf of the Federal Tax Authority.
A business (not an end consumer as he/she is not a taxable person) who is making taxable supplies must go for registration in order to be compliant with VAT Law in UAE.Registration can be done under two categories; mandatory and voluntary.
Mandatory/ compulsory VAT registration
- A business must register for VAT if the total value of its taxable supplies and imports exceeds the mandatory registration threshold over the previous 12 months, or
- The business anticipates that the total value of its taxable supplies and imports will exceed the mandatory registration threshold in the next 30 days.
- The mandatory registration threshold is AED 375,000. This threshold is not applicable to foreign businesses.
Voluntary VAT registration
- A business may choose to register for VAT voluntarily if the total value of its taxable supplies and imports or taxable expenses in the previous 12 months exceeds the voluntary registration threshold, or
- The business anticipates that the total value of its taxable supplies and imports or taxable expenses will exceed the voluntary registration threshold in the next 30 days.
- The voluntary registration threshold is AED 187,500.
FAQ regarding VAT registration
Which sectors in UAE are subject to VAT? Are all businesses required to register for VAT in UAE?
VAT is applicable on the supply of all goods and services of all sectors in UAE except where no explicit provision is made to impose a zero rate or an exemption.
When to submit VAT registration application to FTA? Are there speciﬁc dates for businesses to register for VAT?
The value of the supplies over previous 12-month period must be monitored on an on-going basis i.e. daily (and not just at every month-end). Therefore, the company must submit the registration application within (30) days of being required to register i.e.crossing threshhold.
How to register for VAT?
Tax registration can be done through the Federal Tax Authority’s website, available 24 hours a day, 7 days a week.
How do you check your registration?
After registration, FTA issues VAT registration number i.e. TRN that is a proof of registration and should be mentioned on various documents as required by the VAT law. You can check your registration status by logging on to FTA portal.
Is there any penalty for non-registration? Is it illegal to not register for VAT in UAE?
All businesses must submit an application for registration as soon as possible when the criteria for registration is met, in order to avoid the risk of non-registration by January 1, 2018, which would entail ﬁnes as stipulated in Cabinet Decision No. (40) of 2017 on Administrative Penalties for Violations of Tax Laws in the UAE.