VAT Registration in UAE
The VAT law was effective in UAE from Jan 1st, 2018. Any business registered under VAT in UAE is liable to charge 5% VAT on all supply of non-exempted goods and services. VAT registered businesses can later claim ITC (Input Tax Credit) on the total VAT paid to the government.
VAT registered businesses will also be liable to keep up with the VAT accounting cycle which involves procedures like the periodical update of accounts, hard and soft copy of Tax Invoices, Credit as well as Debit Notes and records of all inward and outward supplies made.
In addition to above, all companies need to ensure these key measures under VAT in UAE:
- Business specific Accounting Software and TRN registration.
- Maintain all records and documentation as per the norms of FTA.
- Maintain inventory to claim/set off / recover ITC.
- Timely Filing of VAT return and payments
Who Should Register Under VAT?
The mandatory registration threshold for VAT registration in UAE has been fixed at Dh 375,000 whereas the voluntary registration threshold of Dh187,500. This implies that those businesses with a turnover exceeding Dh 375,000 are liable and must register under VAT.
On the other hand, business with turnover greater than the voluntary threshold can register as an option else seek exemption from VAT registration. Businesses with no mandatory VAT liability would most probably be pushed to register in zero-rated or exempted category by other registered businesses who might demand TRN Number during sales of Goods and Services.
On this basis, VAT registration in UAE can be classified into the following:
1. Mandatory VAT Registration
2. Voluntary VAT Registration
3. Exemption from VAT Registration
VAT Registration Deadlines in UAE
The initial deadlines fixed by the UAE Tax Authorities were:
- 31 October 2017 for research and development based firms/businesses.
- 31 October 2017 for businesses with taxable supplies in excess of AED 150m.
- 30 November 2017 for businesses with taxable supplies in excess of AED 10m
- 4 December 2017 for all other businesses.
However, as a relief for those who missed the above deadlines, the Federal Tax Authority extended the registration deadline until April 30 for those companies who could not file the return in time due to technical and resource issues. Companies must register for VAT by April 30 to avoid administrative penalties.
VAT Turnover Calculation for Registration in UAE
The mandatory threshold for VAT registration is AED 375,000 and the voluntary threshold is AED 187,500. Hence it becomes extremely critical for a business to correctly evaluate as well as emphasize those supplies which are critical components of the annual turnover.
How to Apply for VAT Registration or TRN in UAE
Businesses in UAE with a turnover exceeding AED 375,000 must register for VAT. The FTA UAE facilitates online registration for VAT via its online portal. Registrations are being carried out in a phased manner. Besides stepping up and owning their responsibility towards VAT compliance, businesses also need to be aware of the steps involved in the VAT registration.
They must ensure that all the prerequisite related to documentation as well as digital signatures are arranged properly to avoid unnecessary delays. Businesses must remember that furnishing of incorrect details might even lead to rejection of registration application. Avoid any such mishaps during online application for VAT registration.
VAT Group Registration
In the new VAT regime, a single entity can have more than one Tax Registration Number (TRN) if only if prescribed by the UAE Executive Regulation or the FDA. Businesses with subsidiary branches spread across the length and breadth of the Emirates require only one VAT TRN number for ensuring smooth and seamless business operations. Further, VAT Group registration number can be obtained by two or more co-owners/associates in business operations.
TRN (Tax Registration Number)
TRN is the unique identification number issued by the UAE’s Federal Tax Authority to taxpayers as well as business owners/firms to track their transaction history during a financial year. The 15 digit TRN is mandatory for annual turnovers exceeding AED 375,000. A person with a turnover exceeding AED 187,500 but below the mandatory threshold can apply for voluntary TRN.
The taxable person is termed as the Registrant. The TRN is an integral part of VAT return forms, Tax Invoices, Tax Credit Notes, etc.
Mandatory VAT Registration in UAE
Businesses with a physical presence in the premises of the UAE residents having a previous annual turnover of more than AED 375,000 must mandatorily register under UAE VAT.
Businesses with projected turnover set to exceed the threshold limit of AED 375,000 in the next 30 days must also register under UAE VAT.
Those businesses, who do not have a place of residence in the state of UAE, need to positively register under VAT irrespective of the registration threshold.
Voluntary VAT Registration in UAE
The threshold for voluntary registration is AED 187,500. Those businesses with turnover in the range of AED 187,500 to AED 375,000 can apply for Voluntary Registration if they wish to do so. This an ideal option for start-up businesses to register with zero turnovers.
Businesses engaged primarily in zero-rated supplies, as well as those whose annual turnover does not cross the voluntary registration threshold of AED 187,500, need not apply for VAT TRN.
How to Apply for VAT Registration in UAE
For a successful VAT Registration, the taxpayer must have an e-Service Account. With an active e-Service account, you can proceed with the VAT Registration Process. Upon successful completion, TRN is generated. The taxpayer must be very careful and upload valid/correct documents during the process of online application.
Creation of e-Service Account
An FTA approved e-Service account is the prerequisite for online VAT registration. FTA authorized e-Service account are as easy to set up as other online accounts like Gmail, Yahoo, Facebook. For opening an e-Service account visit ‘https://eservices.tax.gov.ae’ and follow the steps below:
- Click on Sign up and carefully fill in the details such as e-mail Id, password, security code and security question in the form on your device’s screen.
- After completing and submitting the form, an automatic email will be sent to your registered email id.
- Log in to your account with your credentials (User Name and password)
VAT Registration Process
To apply for VAT registration, you need to login to your e-Service account using your login credentials. The step by step details on how to apply for VAT registration in UAE.