The world is drifting through innovation and most entrepreneurs have already set up their own businesses in the UAE. As a patriot or a businessman conducting business in UAE, one has the responsibility to adhere to the tax laws and regulations of that state by taking a tax registration number.
Are you an entrepreneur yourself? Are you confused about how taxation works in UAE? Well, we have got you covered!
Most of you may ask, what is a tax? Well, it is a contribution given to the government to carry out welfare-oriented activities for the people. If your business has strong accounting records and accurately reported profits, registering for taxes such as VAT won’t be much of an issue.
What is Tax Registration Number?
TRN number (Tax Registration/Identification Number) is an official number code allotted to the business for their identification. To become a filer of tax, you first need to register your company legally which will allow you to receive a TRN number. But what is a TRN number? In the world of accounting, an organization and an individual have a separate identity. To officially introduce your company to the government, the Federal Tax authority will issue a 15- digit number which will be an identification for your business.
The entity to whom the tax identification number UAE has been issued is referred to as the ‘registrant’. Your tax ID number UAE will be used for various government documents and will be allotted to you automatically once you register for VAT, and will be used by the government to track your transactions.
Structure of TRN (Tax Registration/Identification Number)
TRN is a unique identification number provided to organizations that distinguishes them from the rest the rest of the businesses as each had their own TRN code. UAE tax identification number contains 15 numbers, in fact, unique numbers which has a format of 100-xxxx-xxxx-xxxx.
Documents Required for TRN
To apply for TRN, you must upload some legal documents so that they can be scanned and scrutinized. It includes the Registered Email ID for portal login and company documents such as trade license, memorandum, and articles of Association. Here is a list of some other documents required:
- Passport copy and Emirates ID of owners/shareholders.
- Copy of power of attorney, passport, and Emirates ID of the manager/authorized person as well as the mobile number.
- Turnover declaration letter containing sales figures from 2017 as per FTA format.
- Supporting documents of company revenue.
- Projected Future Revenues with supporting documents like confirmed purchase orders.
- All the Bank Account details including the IBAN.
The requirement of these documents may vary according to the type of business. To avoid mistakes in the registration form which might lead to the dismissal of the form, several accounting firms could be hired for assistance such as JAXA Accounting Services.
Process to verify Tax Registration number in UAE
Now you know how the TRN works and the purpose of the UAE tax identification number. However, the question still remains, how do you verify your tax ID number UAE? Well, the procedure for Tax Registration Number is quite straightforward and transparent. You can also avoid the need to go physically to register your organization, instead, you can verify your TRN online.
Here are the steps to verify TRN:
Step 1 - Log in to your E-services account
For greater convenience, the Federal Tax Authority has introduced its online portal. Input your email and password to receive your login credentials on the email you have provided.
Step 2 - Click on ‘Register for VAT’
Next, log in to your account and click the ‘Register for VAT’ button visible on the screen. A VAT guide will appear on the screen to clarify any queries and to guide you about the process and importance of VAT. Once you are done reading, tick the box labeled ‘Click Here’ and “Proceed”.
Step 3 - Fill out details in the Registration form:
Once this is done, a registration form will open in front of you which will require you to fill eight different sections with the necessary details. You can keep track of the pages. The pages that are marked green meaning they are completed. Once done, click on ‘Submit for Approval’
The Federal Tax Authority will review your form and if all details are clear, will issue you the VAT and Tax Registration Number so you can now start contributing to the betterment of your society!
Why must you verify the Tax Registration Number
It is true that some organizations have profit maximizing objectives and payment of tax is seen as a liability. However, paying VAT and verifying your tax identification number UAE might be beneficial for the business!
Of course, every business has ups and downs and ultimately almost every business needs to hunt for some sources of finance. In this case, the registered VAT businesses enjoy an advantage as financial institutions or even customers may insist on TRN number before starting a relationship with companies
And this is not it! Of course, to help the business grow, you need more customers. Well, the UAE tax identification number will help your business to look bigger which might attract more customers and ultimately benefit the company. Most customers will be willing to deal with organizations that have a TRN number as it removes suspicions and helps the business look more professional. In addition, customers will get the impression that your revenue is greater since you have exceeded the minimum limit of turnover to register for VAT. Moreover, you will be complying with tax laws which will be stress-free instead of trying to manipulate profits from the government to avoid paying taxes.
But don’t think of VAT and TRN as a burden on your transactions! The TRN allows the business to operate on a set-off basis meaning any amount you owe or which is owed to you, in case of overpayment, will be adjusted automatically.
Types of Tax Identification Number
There are five types of tax identification number in UAE –
Social Security Numbers
The social security number is the most common form of tax identification number for personal identification and tax purposes. Social security number is used for filling the income tax returns of employees and used by parents to claim income tax as a dependent on behalf of their children. It is used for Social Security and Medicare facilities to the individual employee. Applications for free and fee-based application, both the options are available for new parents.
Employer Identification Number
IRS to recognize corporations, trusts, and real estates that are taxpayers uses the employer identification number. Application for Employer Identification Number is free and can be obtained immediately after filling it for income tax purposes.
Individual Tax Identification Number
Individual Tax Identification Number by IRS provides certain non-resident aliens who do not qualify for SSN for tax returns benefit. The consort of non-resident aliens includes the number of tax returns on his shoulder when he files for it. In order to get an ITIN, the applicant must complete Form W-7 along with documents supporting his non-residential status.
Adoption Tax Identification Number
The ATIN only applies to domestic adoptions when the adoptive parents cannot obtain the child's SSN in time to complete their tax returns on time. A particular criterion is necessary like the adoption must be pending the child should be the citizen of UAE.
Preparer Tax Identification Number
From Jan 1, 2011, the listing of a PTIN on each tax return preparer file is made mandatory by IRS. Prior to this date, the use of the PTIN was optional. Any Preparer who wishes to complete all or part of a tax return or refund to another individual must have a PTIN number.