How to Register your Company for VAT?

There is a great need to create and maintain business records in the United Arab Emirates, especially after the implementation of Value Added Tax. Keeping a record of all the transactions related to the business will not only help in finding out the present condition of the business but will also help in deciding a path for the future of the company.

The implementation of Value Added Tax on the 1^st of January 2018 was a monumental decision concerning the future of the country and also provided a new source of revenue for the economy of the country.

After the registration of a company in the UAE, the company can apply for Tax Registration Number (TRN). To know more about the procedure to apply for a Tax Registration Number (TRN) in the United Arab Emirates Click Here.

Benefits of Registering for VAT

In the United Arab Emirates, it is anticipated that all the businesses in the country should register for VAT. Some of the benefits of registering for VAT are:

Customers/suppliers/financial institutions normally insist for TRN number before starting relationship with Companies.
Result in complying with tax laws of the country.
The Vat registration will help your business looks bigger and more efficient, which will help it attract more customers and investors.
After registering for Value Added Tax, the business will receive a TRN, which will allow the business to avail of the benefit of a set-off. A set-off is a difference between the VAT, which is given out, and the VAT, which is received. A set-off will help in the company to claim for the difference between the VAT, which has been given out and which has been received from various sources.

The advantages mentioned are only some of the reasons due to which a business should register for Value Added Tax (VAT) in the United Arab Emirates.

How to register for VAT?

To procure a TRN, a company needs to follow a procedure that will get the business registered with the Federal Tax Authority (FTA) in Dubai. Here is a step by step method following which a business can register for VAT in the UAE.

1. Do you need to register?

First, you should figure if you even need to register for VAT. According to the laws in the UAE, there are specific criteria (threshold revenue) mentioned which will allow a business to find out if the business should register for Vat.

If the revenue of the business is equal to or greater than AED375,000, it is compulsory for the business to register for VAT.

If the revenue of the business is between AED 187,500 and AED 375,000, then there is no compulsion for VA registration. However, one can ask for a voluntary registration.

If the revenue of the business was less than AED 187,500, then FTA will not issue TRN. But if business can prove that it will reach the threshold limits within next 30 days, then they submit a voluntary application.

2. Obtain the Necessary license

If you are engaged in business, you must get a valid license from the authorities. Without having a license, it is impossible for a company to register for Value Added Tax. Individuals who earns taxable income (like rent from commercial properties, director’s fees, consultancy fees etc.) may apply for TRN in their individual capacity.

3. Create an E-Service Account

The business must create an account with the Federal Tax Authority. The business management should keep the mentioned business documents nearby so that there is no problem while filling in the necessary details. Some of the documents which are essential for VAT registration are:

Registered Email ID
If the applicant is a company, copies of legal documents such as trade license, share certificates, Memorandum and Articles of Association etc.
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 for the revenue
Projected Future Revenues with supporting documents like confirmed purchase order.
Details of Bank Account including IBAN number
Registered address of the company ( Building name, office No, Street, P.O Box and Phone number)
Customs Details will be required only if the Company deals in such kind of business.

As per the requirement of the business and also according to the activity being performed, the Federal Tax Authority (FTA) may ask for more documents from the management of the business. By following the above mentioned three steps, it is possible for a company to register for VAT in the UAE.

Sometimes registering your company for VAT can be a complicated task for the management, which is why you should avail the assistance of a consultancy firm that has experience.

JAXA Chartered Accountants is one of such consultancy firm which will take care of all the requirements of a company related to VAT- from assisting in getting the TRN, submitting returns and assisting in tax audits. JAXA can take care of your accounting, tax and audit requirements while you can concentrate on your business. For more details on the service provided by JAXA, Contact Us. We will be happy to help.