How to Register for VAT in UAE?
VAT registration in the UAE is required for businesses whose taxable supplies and imports exceed AED 375,000 in the last 12 months or are expected to exceed this threshold in the next 30 days. Voluntary registration is available for businesses exceeding AED 187,500.
Steps to Register:
- Create an EmaraTax account on the FTA portal.
- Submit required documents such as a trade license, Emirates ID copies, and bank details.
- Complete the registration form and wait for approval.
- Once approved, receive your Tax Registration Number (TRN) for VAT compliance.
VAT registration allows businesses to reclaim VAT on purchases and ensures compliance with the UAE’s tax laws.
How to Register for VAT in UAE – VAT Registration UAE Full Process
What is VAT, and Why is VAT Registration Important?
Value Added Tax (VAT) is a type of consumption tax on goods and services within the United Arab Emirates. This tax is collected at every stage of a product’s sale—in other words, from production to the final point of sale. For consumers, the Value Added Tax (VAT) is included in the price of goods and services. In contrast, businesses are responsible for collecting and submitting the tax to the government.
In the UAE, registration for Value Added Tax (VAT) is required for all businesses. Recovering VAT on business expenses not only meets legal requirements but also boosts a firm’s financial performance. This advantages businesses by lowering operating expenses and giving them enhanced credibility.
Whether you are starting a business in Dubai or already operating in the UAE, understanding VAT registration is crucial. It helps with compliance, avoids penalties, and ensures smooth operations. Businesses that don’t register for VAT will face serious consequences, including costly fines.
Who Needs to Register for VAT in the UAE?
A. Mandatory VAT Registration
A business is required to register for VAT if it meets the following criteria:
- A company must register for VAT if its taxable sales and imports exceed AED 375,000 in the last 12 months. It also needs to register if it expects to reach this amount in the next 30 days.
- Foreign Businesses: Foreign businesses must register for VAT if they supply goods or services in the UAE. This requirement applies no matter their taxable turnover. These businesses must register regardless of whether they meet the registration threshold.
Foreign businesses must register for VAT if they provide goods or services in the UAE. This applies regardless of their taxable turnover. These businesses must register, even if they do not meet the registration threshold.
B. Voluntary VAT Registration
The FTA VAT registration process requires that businesses meet these criteria and take steps to comply with the tax laws of the UAE.
- Taxable Supplies and Imports Exceed the Voluntary Threshold: Businesses can still register for VAT voluntarily if they don’t meet the requirement. The voluntary threshold is AED 187,500. A business can choose voluntary registration if its taxable supplies or expenses from last year are above this amount. It can also register if it expects to exceed this amount in the next 30 days.
- Benefits of Voluntary Registration: Voluntary registration for VAT has key benefits. You can reclaim VAT on expenses. Also, it helps improve your market position. This shows that your business is tax-compliant.
- For some businesses, especially those that seek to grow, it is an asset in reputation and credibility.
Documents Required for VAT Registration
To complete the steps of online VAT registration in UAE, businesses need to get some documents first. These documents are key for verifying a business’s information. They also confirm that the necessary criteria for VAT registration are met. Some of these documents include:
- Copy of Trade License: A copy is required showing that the trade license is active and not expired.
- Owner, Shareholder, and Manager Identification: Passports as well as IDs covering shareholders, owners and managers must be attached.
- Company Contact Details: This refers also to the relevant P.O. Box as well as building area specific details of the company’s address.
- Memorandum of Association (MOA): Required but not needed for sole contracts that do not have any partners for other business types.
- Bank Account Details: Details such as the company’s account IBAN, account number, bank name and branch are required.
- Sales/Purchase Invoices: Sample invoices for purchase and sale that have been stamped and signed must be attached.
- Customs Letter: This letter becomes pertinent if the company handles customs.
To begin this process, the documents need to be uploaded on the FTA online VAT registration portal.
Steps to Complete VAT Registration Online in the UAE
VAT registration in the UAE can be done through an online system. To register for the VAT, please take the following steps:
Step 1: Create an EmaraTax Account
Go to the FTA website and register for an account on the EmaraTax Portal. An email, password, and some business information will be required.
Step 2: Complete Your Profile
After creating your account, log in. Then, provide your legal information, business type, and taxable turnover. This info helps the FTA review your VAT registration request properly.
Step 3: Select VAT Registration
After completing your profile, navigate to the VAT section and click on the VAT Registration option.
Step 4: Provide Documents
Please upload all the extra documents we talked about before. This includes your trade license, copies of your Emirates ID, and turnover declaration.
Step 5: Submit Your Application
Before you submit the VAT registration application, check that all the information is correct.
Step 6: Wait for Approval
The FTA will assess your application. This process usually requires around 2-3 weeks. Upon approval, the Tax Registration Number (TRN) will be provided.
It is important to note that the TRN should be included in every issued invoice, in addition to all transactions involving VAT.
What is the VAT Registration Threshold in the UAE?
The thresholds for registering for VAT determine if a business requires registering for VAT. The United Arab Emirates sets the mandatory VAT registration threshold for value-added tax registration at AED 375,000. Businesses surpassing this threshold in either taxable supplies or imports must register.
Businesses that don’t meet the mandatory threshold can still register voluntarily. The voluntary registration threshold is AED 187,500.
How to Get Your VAT Certificate Online in the UAE?
After you register, the Federal Tax Authority (FTA) gives you a registration certificate. This certificate includes your TRN and the VAT effective date.
Steps to Get Your VAT Certificate Online:
- Log into your EmaraTax account.
- Navigate to the VAT Registration Section.
- Download your VAT certificate directly from the portal.
The VAT certificate is very important for a business. It shows that the business follows VAT rules in the region. It also places the business in the VAT-registered category.
Common Mistakes to Avoid During VAT Registration
The registration process is simple. However, businesses often overlook details when filling out documents. This can delay their registration or lead to penalties. These are some of the most common mistakes:
- Delaying Registration: All businesses must refrain from delaying their application after surpassing the threshold. Registration delays can result in hefty penalties.
- Incorrect VAT Type: Businesses need to check that they have set the correct accounting method to either standard VAT or simplified VAT. The chosen approach can drastically affect compliance.
- Not Maintaining Accurate Records: A business needs to account for all transactions related to VAT. Omitting any records can result in severe consequences during audits.
- Late VAT Returns: Businesses must file VAT returns on time to avoid penalties. Large businesses usually file returns every quarter or month. Smaller businesses can choose either option.
Benefits of VAT Registration for Businesses in the UAE
Being registered for VAT offers businesses benefits that boost their reputation and finances. These benefits include tax refunds on purchases and operating costs.
- VAT Refunds Once registered, businesses can reclaim VAT paid on purchases and expenses, which helps reduce operating costs.
- Enhanced Credibility The VAT refund system reduces the operative expenditure a business incurs as the recovery of VAT offers cost alleviation.
- Access to VAT-Registered Businesses Showing compliance with tax laws builds trust with customers and suppliers.
- It also helps VAT-registered companies work together. This boosts transaction efficiency in the business.
- Avoid Penalties Registering for VAT becomes compulsory upon surpassing a predetermined threshold. Failure to comply invites a fine of AED 10,000 for missing VAT registration, along with AED 1,000 per tax period for not submitting VAT returns.
How to Cancel VAT Registration in the UAE
A business must cancel its VAT registration if it no longer meets the requirements. For example, this happens when its taxable turnover falls below the threshold. Steps include:
- Log into your EmaraTax account.
- Navigate to the VAT Registration Section.
- Submit a cancellation request for VAT registration.
You will get confirmation after the FTA processes your cancellation request. After that, you won’t need to submit VAT returns.
Conclusion
VAT registration in the UAE is a crucial step for businesses to ensure compliance with the country’s tax laws. Choosing between mandatory or voluntary VAT registration is simple. The process helps businesses get VAT refunds, avoid penalties, and stay in good standing with UAE tax authorities.
By understanding the VAT registration process, gathering the necessary documents, and following the steps outlined in this guide, businesses can easily navigate VAT registration and establish credibility in the market.
If you are unsure about the process, business setup consultants in Dubai or VAT registration services can assist with the registration and help ensure full compliance with UAE VAT laws. Begin your business setup in UAE, knowing you’re following the right VAT rules for lasting success.
