Register company for VAT in UAE

How to register company for VAT in UAE?

We often get queries asking us what our charges are to “register company for VAT in UAE”.  This prompted us to write this blog to explain that there is no need to pay for registering for VAT in UAE to any authority or consultants as it can be done by the business very easily.

Value Added Tax (VAT) was implemented in UAE from 1st January 2019.  This requires eligible businesses to register with the Federal Tax Authority (FTA) to get the Tax Registration Number (TRN).  It is also possible to register multiple businesses with the same beneficial owner as one entity, this is called Tax Group Registration.

So How to register company for VAT in UAE?

Firstly, the business is required to be registered as a business entity in UAE to be eligible to register for VAT in UAE.  The only exception is for businesses primarily registered in the Gulf Cooperation Council (GCC) countries and does business in UAE.  Consequently, companies registered elsewhere do not have the option to register for VAT in UAE.

Is it mandatory to register all businesses in UAE for VAT?

No.  An eligibility criterion has been set in the VAT law issued in UAE, which specifies the thresholds for voluntary and mandatory registration of businesses for VAT.  The thresholds are based on the equivalent local currency values of the GCC countries for a standardized US Dollar value.

What are the thresholds in the UAE for VAT registration?

The Thresholds are based on either total turnover or total expenditure crossing the threshold levels within a 12 month period, usually, considered as past 11 months and the current 30 days period.  The thresholds are:

Voluntary Registration:      USD. 50000/- (AED. 187500/-)

Mandatory Registration:    USD. 100000/- (AED. 375000/-)

Once a business crosses the voluntary threshold level, they have the option to register for VAT in UAE, however, when the business breaches the mandatory threshold, they need to compulsorily register for VAT in UAE.

What revenue and expense items are considered while calculating threshold values for registration of VAT in UAE?

Only those income and expenses which are subject to VAT are to be considered while calculating the revenue and expenditure to evaluate the business eligibility for registration of VAT in UAE.  For e.g. Third port transactions, transactions on exempt items are not subject to VAT, consequently, revenues from these transactions are to be excluded when calculating the turnover to check eligibility.  Similarly, salary to staff members, staff entertainment expenses, etc are not subject to VAT credit benefit for the business, consequently, these expenses are to be excluded when calculating the expense to check eligibility.

How to register a company for VAT in UAE?

Eligible companies can register for VAT in UAE on the FTA tax portal

The process requires registering first for E-Services on the FTA portal, the registration process includes an email validation process as well.  Once registered, on logging into the portal, a dashboard is provided with options to register a business for VAT, register for Excise Duty and also other options for filing tax returns, checking the status of VAT liability, etc.

What information is required as part of the registration process for VAT in UAE?

You will need information about the business based on your trade license, you will need information about the nature of business, the information with regard to owners, partners, managers and authorized personnel for the business, you will need information with regard to the location of the business and more importantly you will need information regarding the turnover and expenditure.  In case, you are registered for customs in UAE, you will need the information regarding the same to be available for you to populate the registration form.  NOTE: most of the key information is also required to be populated in Arabic.

What documentation is required as part of the registration process for VAT in UAE?

Documentations by way of Trade License copy, MOA / NSA copy, Passport, and Emirates ID copy of all the persons (Owners, partners, managers, authorized personnel), document to support the turnover and expenditure information being submitted, copy of document authorizing the authorized personnel, letter from Customs department if registrant is already registered with Customs (This is available on request from the customs department).

Are all applicants registered for VAT in UAE by default on submission online?

The status of the application is reflected as in-process until approval.  In case, the FTA is not satisfied with the information provided, they can request for additional information, corrections, documents to re-verify the application, in such cases, the registrant is notified and the status changes to re-submit.  The registrant is required to rectify and address the FTA requirements and resubmit the application.

What are the timelines for FTA to respond to registrations done online?

The standard turnaround time is within 20 business days.

Are the Customs and VAT registration numbers automatically linked when customs letter is included while registering for VAT?

There is a separate process to link your TRN number with the Customs file. This process is by way of application to the Customs department with a copy of your TRN Certificate and is done promptly. This is important for businesses that import goods.  Goods imported are subject to the reverse charge mechanism.  The VAT on imports is calculated on the basis of the cost of goods imported plus customs duty and other applicable vatable charges.  In case, the Customs and TRN numbers are linked, then the VAT component of the transaction can be settled as part of the tax return filing process, else, VAT will have to be paid at the point of import.

Overture Accounting and Bookkeeping LLC provides comprehensive VAT compliant accounting and bookkeeping services with complementary VAT consultancy and support services.  Details of our accounting offers are available here.

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