16 December, 2022

Is Your Company Eligible to Pay VAT in UAE? – Guidelines for Businesses in UAE

vat in uae

A firm that is registered under the VAT in UAE law is recognised by the government as a supplier of goods and services and is entitled to collect VAT from customers and submit it to the government. Only VAT-registered enterprises will be permitted to carry out the following activities:

  • Value-added tax (VAT) is levied on taxable products and services.
  • Input Tax Credits can be claimed for VAT paid on purchases, which will be subtracted from the VAT liability on sales.
  • VAT is a tax that must be paid to the government.
  • VAT returns must be filed on a regular basis.

Apart from that, all registered businesses must align their business reporting structure with compliance requirements, such as maintaining accurate and up-to-date books of accounts, tax-paid documents such as Tax invoices, credit notes, debit notes, and records of all inward and outward supplies, among other things.

As a result, one of the most critical aspects in your VAT preparation will be to learn the foundations of VAT, and acquiring VAT registration will be the first step in transitioning your organisation to the VAT era.

Who should register under VAT?

Is it mandatory for all firms to register for VAT? No, only enterprises with an annual aggregate turnover of more than a certain amount are required to register for VAT. A business will either be required to register or will have the option of applying for registration or seeking exemption from VAT registration, depending on the registration threshold.

VAT registration in the UAE can be categorised into the following categories based on this:

  • Registration for VAT is required.
  • VAT Registration on a voluntary basis
  • Registration for VAT exemption

VAT turnover calculation for Registration in UAE

In UAE VAT, businesses whose annual turnover exceeds the mandatory registration threshold of AED 375,000 and the voluntary registration threshold of AED 187,500 are allowed to apply for VAT registration. Therefore, it is crucial for businesses to understand what type of supplies are considered in deriving the annual supplies turnover and how to calculate the VAT turnover for registration in UAE.

How to apply for VAT registration in UAE

Businesses with a revenue of more than AED 375,000 in the UAE are required to register for VAT. The Federal Tax Authority (FTA) has created an online VAT registration gateway to make it easier for firms to register. FTA has already stated the timeframes based on business turnover, and registration will be done in stages. While it is critical for businesses to understand their VAT registration obligations, they must also understand how to apply for VAT registration and the degree of information required to complete the online registration procedure.

  • Creation of e-Service Account
  • Login to your e-Service Account
  • VAT Registration Form: The online VAT registration form contains 8 sections as shown below, in under which the details need to be furnished for completing VAT registration
    • About the applicant
    • Details of the applicant
    • Contact details
    • Banking details
    • Business relationships
    • About the VAT registration
    • Declaration
    • Review & submit

VAT group registration

Unless otherwise specified in the UAE Executive Regulation, any person conducting business in the UAE is not permitted to hold more than one Tax Registration Number (TRN). As a result, even if you have branches in multiple Emirates, you only need one VAT registration. With a similar goal in mind, if two or more people in a firm are related or associated, they can apply for VAT group registration.

How can Radiant Biz help?

In matters like business setup in Dubai, people tend to get confused and get in chaos due to several rules, regulations, and multiple requirements. This is the time when people tend to look for an expert. A lot of chaos can be avoided if guidance is taken from the initial state of the commencement of the business. Every venture may have unique requirements like location, customer convenience, logistical feasibility, and banking services.

We at Radiant Biz strive to understand these unique precepts and provide expert and reliable consultation to our clients with updated laws and governing regulations, awareness of their rights, and cost-effective business solutions tailor-made to their business needs and budget.

RadiantBiz has a variety of packages for clients who intend to stay in the area for a long time. Expats and foreigners can get long-term visas and have their visas renewed with the help of the firm.

Pre-investment business advising services on legal structuring, licencing, and regulatory problems are also available. This can involve assistance with obtaining professional, trade, or industrial licences, as well as other services.