Key Points to Know About VAT Registration in UAE

The VAT (value added tax) has been successfully launched in UAE with the last date for registration extended up to April 30, 2018. All eligible businesses in the country must ensure that they are registered for the VAT and follow the regulations. The FTA (Federal Tax Authority) has also recommended that all businesses get equipped with the key facts on registering for VAT. This article shares all the things a UAE business/person needs to know about VAT registration.

The information and complete guidelines along with revised laws and regulations are also available on the FTA website. The guideline intends to educate businesses in the country with the process of calculating the VAT, outline the obligations of various parties and explain the registration steps and procedures.

VAT Registration – Things You Should Know

Businesses with annual turnover less than Dh375,000 are not mandatory to register for tax

It is mandatory for UAE businesses to register for VAT only if their taxable supplies over the last 12 months exceed Dh375,000. The voluntary registration threshold is Dh187,5000. Businesses with turnover less than this cannot register for VAT and do not have to get a tax registration number (TRN).

Natural (Legal) persons need to register for VAT if they make supplies more than the mandatory threshold

An individual person in business must register for VAT if they make taxable supplies worth Dh375,000 or more over the past 12 months, or expect to pass the threshold limit in the next 30 days.

VAT Registration is Open

VAT registration is open to all new and existing businesses. Business reaching the threshold limit can also register for the VAT now.

TRN is all a business needs to perform various commercial activities

The tax registration number (TRN) is all a business needs to carry out any economic activity as the TRN verification service on the FTA website can easily verify the TRN number of a business. Once a business gets its TRN, it can continue to trade, even if the registration is not completed. This is to ensure that the implementation of VAT does not result in any negative impact on businesses.

Calculation of the mandatory limit will be based on revenues

The mandatory threshold for VAT registration in the UAE is calculated on total business revenue generated by a business on taxable supplies over a period of 12 months. The threshold is calculated only on the value of goods and services that are purchased and not on profits.

The last date for registration is April 30 after which late registration penalty will be applicable

The FTA has recently decided to exempt businesses who have not registered yet for the VAT, however, the exemption is only valid until the end of April 2018. All businesses are required to register within this period and file their returns and pay taxes accordingly.

Unregistered businesses cannot charge tax

UAE businesses that are not registered for the VAT cannot impose any tax on their customers and also cannot issue VAT invoices. However, these businesses still need to pay a customs tax on imported goods, which they cannot claim back. A penalty of Dh20,000 will be levied on any violation of such regulations.

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