VAT Registration In UAE

Introduction 

Value-added tax, or VAT, is a type of indirect tax that is used in 160 countries throughout the world. VAT is a taxing system that is levied on the consumption of a variety of commodities, products, or services. It is a “Consumption tax” that has nothing to do with the taxpayer’s income. This taxation system is commonly used in the European Union. VAT was implemented in the UAE and the GCC countries at the beginning of 2018.

The VAT rate in the UAE and the Gulf Cooperation Council nations is 5%. As the name implies, the value-added tax adds or increases the value of a product or commodity at various stages of the supply chain. And this value addition occurs throughout the manufacturing process, as well as during distribution and sales. VAT registration service is required in Dubai, UAE for all enterprises, regardless of their domain or size. If you are an entrepreneur looking to grow your business in the UAE or a business owner in the UAE, you should be familiar with the VAT registration service in the UAE.

A business that is registered under the VAT law is recognized by the government as a supplier of goods and services and is authorized to collect VAT from customers and remit it to the government. Only VAT-registered businesses will be permitted to carry out the following activities:

• Charge VAT on the taxable supply of goods and services
• Claim Input Tax Credit on VAT paid on their purchases, which will be deducted from VAT liability on sales
• Payment of VAT to the government
• Periodic filing of VAT return

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 important steps in your VAT preparation will be to understand the fundamentals of VAT, and obtaining VAT registration will be the first step in transitioning your business to the VAT era.

Who is required to register for VAT?

Is it mandatory for all businesses to register for VAT? No, only businesses 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 classified into the following categories based on this:

• Mandatory VAT Registration
• Voluntary VAT Registration
• Exemption from VAT Registration

VAT Turnover Calculation for Registration in UAE

Businesses can apply for VAT registration in the UAE if their annual turnover exceeds the mandatory registration threshold of AED 375,000 and the voluntary registration threshold of AED 187,500. As a result, it's critical for businesses to understand which types of supplies are taken into account when calculating annual supplies turnover and how to calculate VAT turnover for UAE registration.

How to Register for VAT in the United Arab Emirates

Businesses with a turnover of more than AED 375,000 in the UAE are required to register for VAT. The Federal Tax Authority (FTA) has opened an online VAT registration portal to make it easier for businesses to register. FTA has already announced the deadlines 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 level of information required to complete the online registration process.

• Account creation for e-Services
• VAT Registration Form: Log in to your e-Service Account. The online VAT registration form has eight sections, in which the applicant’s information must be provided to complete the VAT registration.
• Information about the applicant
• Information about how to contact the applicant
• Bank account information
• Business-related relationships
• Information concerning the VAT Registration
• Declaration
• Examine and submit

Benefits Of VAT Registration In UAE

Here are some of the most obvious advantages of registering your business for VAT.

• VAT does not have penalties if you register for it.
• Vat reimbursements can be requested in writing by businesses.
• VAT improves commercial opportunities.
• The VAT raises the company’s profile.
• VAT management is simple when compared to other taxing systems such as indirect tax.
• Prevents tax avoidance from occurring.
• VAT allows for more revenue creation.
• VAT can be imposed on any type of business because it is a neutral tax.