Detailed Guide to VAT Registration Services in Dubai

For the last many decades, Dubai has retained its global reputation and maintained its record as one of the most business-friendly hubs in the Middle East. Moreover, the government has also been diligently working towards its enhancement to make it more favorable for business establishment. However, entrepreneurs who have just started or are on the way to their new business setup in Dubai must be well-informed about the VAT Registration services in Dubai.

Therefore, in this comprehensive guide, we will discuss the key phases of VAT registration in the UAE, including the registration requirements, VAT returns, and compliance requirements. Let’s start with the basics.

What is Value Added Tax (VAT)?

In simple terms, Value Added Tax is an indirect tax imposed on commercial goods and services and incurred by the end user of the supply chain. This consumption tax has been adopted worldwide by over 150 nations. In January 2018, the Federal Tax Authority(FTA) implemented VAT regulations that specified a set of criteria that every business owner has to meet while applying for VAT Registration services in UAE.

What are VAT rates in UAE?

Taxable goods and services are classified under two categories -

• Standard rated

These goods and services are charged 5% VAT, which may include private educational centers and affiliated services, cosmetic healthcare services, petrol, commercial buildings, serviced hotels, jewelry, food and beverages, telecommunication services, etc.

• Zero-rated

These goods and services are technically taxable but at a rate of 0%, such as government-owned educational institutions, nurseries and pre-schools, healthcare services, crude oil and natural gas, overseas transportation of passengers and goods, residential building, export of goods outside the GCC, etc.

Additionally, there are some goods and services that are categorized under Exempt Supplies by the FTA. In short, these supplies are exempted from taxation. For example, domestic passenger transportation, empty plot, financial services, interest on lending forms, dealings with equity or debt security, life insurance policies, etc.

Thus, understanding VAT rates and regulations is essential for businesses in the UAE. Familiarizing themselves with these laws would only help them to comply with the FTA obligations and requirements unfailingly. For detailed info, connect with Shuraa Tax Consultants.

VAT for businesses

All businesses that deal with taxable goods and services are eligible to apply for VAT Registration services in Dubai. So, while conducting business in UAE, if the company meets the eligibility criteria of VAT, it will be liable to seek VAT services, irrespective of its location in Dubai.

To comply with the VAT rules, businesses are required to have a Tax Registration Number(TRN), which is a unique number assigned by the FTA for tax registration purposes. Once the business owner completes the VAT registration process, the authorities will issue a TRN to the company.

Importance of TRN:-

• Serves as proof of business establishment
• Validates that the company is following the VAT laws and regulations of the UAE
• Administers the filing of VAT return
• Allows businesses to collect VAT on sales and pay it to the UAE government
• Enables application for VAT refunds on business expenses

Types of VAT Registration Services in UAE

The eligibility criteria for VAT registration services in Dubai depend on the company’s annual income and annual taxable expenses. Based on that, there are two types of VAT registration services taxpayers can go for –

• Mandatory VAT Registration
• Voluntary VAT Registration

Mandatory VAT Registration

Companies or individuals with an annual turnover of AED 375000 or more must go for mandatory VAT registration. This registration would them to implement VAT on their supplies and collect it from their customers on behalf of the FTA. Any business that fails to register would attract hefty fines or penalties.

Hence, to perform Mandatory VAT Registration, the businesses have to satisfy either of the following conditions –

• The revenue for the last 12 months(fiscal year) was AED 375000 or more
• The company anticipates an income or imports of AED 375000 or more in the next 30 days.

Voluntary VAT Registration

Businesses and individuals with an annual turnover between AED 187500 and AED 375000 have the option of voluntarily applying for VAT. And if they satisfy this criterion, they can choose to get VAT registered and get a TRN for business. However, if they choose not to get registered, they won’t be subject to any fines or legal consequences, considering it’s a voluntary registration.

So, the criteria under which businesses can apply for voluntary VAT registration are –

• The annual turnover was more than AED 187500 in the last financial year
• The business expects a turnover of AED 187500 or more in the next 30 days.

An important point to remember is that FTA mandates businesses to register for VAT within a specified timespan. If in any case, the business exceeds this time limit, it will be provided 30 more days to register for VAT and get a TRN. However, if the business still fails to complete the registration process, it will be subject to a late registration fine of AED 20,000.

Requirements for VAT Registration in UAE

• Copy of the Trade license
• Passport copies and Emirates ID of owners and partners
• Contact details & address of the company owners
• Memorandum of Association (MOA)
• Bank account details of the company
• Business turnover details for the last 12 months (in the FTA declaration VAT format)
• Financial statements and Audited reports of the company
• Customs authority registration code
• The registered address of the company
• Details of business operations

These are some of the basic documents that may be required during the VAT registration process. The tax consultants of Shuraa can provide you with an updated list of documents and other legal requirements specified under the VAT regulations of FTA.

How to Register for VAT in UAE?

The VAT registration is an online process and can be done with the assistance of Shuraa Tax consultants. They will confirm if your business meets the eligibility criteria and submit the registration application accordingly. The FTA will then review the application and approve a TRN for the company.

Further, the Ministry of Finance will issue a VAT certificate which will stand as an official confirmation that the business is VAT-registered in accordance with the UAE VAT law. The VAT certificate will include the following details –

• VAT Registration Number
• Date of the VAT registration
• Issue Date of VAT certificate
• Address of the Registered entity
• First VAT return period
• Due date of VAT return
• Tax periods (Start date and End date)

Importance of VAT Registration Services in Dubai

Experts believe that the implementation of VAT will bring long-term benefits to the country's economy as well as businesses. Other than that, there are several significant reasons why VAT registration is considered crucial –

• enhances the business profile
• avoids unnecessary penalties
• allows claiming VAT refunds
• expands the market possibilities

Looking for VAT Registration services for your business in Dubai?

Shuraa Tax has been serving clients worldwide and has assisted thousands of businesses with VAT Registration services in Dubai. Their trusted team of experts understands the complexity of VAT compliances and thus guides their clients throughout the process. Given their upright track record, their professionals are all FTA-authorized and have exceptional knowledge in the finance space.

To conclude, Shuraa Tax will serve as a one-stop solution to all your financial concerns.

Write to [email protected] or log on to www.shuraatax.com