Value Added Tax (VAT), an indirect tax levied on the consumption of goods and services has been adopted as a system by almost 160 countries globally. This tax serves as another segment for revenue generation for the higher authority. The Middle-East country UAE is one of the most dynamic countries in the world. The Emirates have got several zones that have been considered as a business free-tax zone that became the centre of investment for foreign investors. If your business is registered under VAT law, it signifies that it holds recognition in the eyes of the government. Having realized this, the GCC countries have recently registered themselves under VAT law and implemented it by 1st Jan 2018 with 5% as the VAT rate.
If you are a business owner in UAE or planning to establish your business roots in the Emirates, be it a small, medium or large business, you need to get your business registered under VAT law. Before moving to the process let’s have a look at the entities who should register for VAT, the importance of VAT followed by the registration process and other essential documents and information.
Businesses having taxable supplies and imports above AED 375,000
Mandated to apply for VAT registration
Businesses having taxable supplies and imports between AED 187,500 and 375,000
Can voluntarily apply for VAT registration
Businesses having taxable supplies and imports less than AED 187,500
Not required to apply for VAT registration
Importance of VAT Registration in Dubai, UAE
VAT is the most recent addition to the roster of taxes in the United Arab Emirates and this is why it is important for businesses that this part of the business is taken care of. Following are the most important reasons why VAT registration is considered an essential part of any business:
- It boosts the business profile and helps to attract more investors.
- It averts financial penalties by ensuring compliance is maintained.
- One may claim VAT refunds.
- It helps to grab a mass-market share in the country.
VAT Registration Process in UAE
The government of the United Arab Emirates has made the process of registering for VAT very easy. It is now an online procedure and requires only a computer and an internet connection.
To initiate VAT registration in UAE, one must fill the VAT Registration form online and submit the essential documents required along with the form in order to attain a VAT Number. The entire registration process takes place on an online platform. Let’s have a look at the documents which are required for VAT registration.
Documents for VAT Registration in UAE
The documents required for VAT Registration in UAE include:
- Copy of trade license
- Passport copy of business owner and partners
- Copy of Emirates ID held by owner and partners
- Memorandum of Association (MOA) of the company
- Company contact details
- Bank account details
- The income statement for the last 12 months
- Nature of business and activities performed
UAE, VAT Registration Online
The online registration for VAT in UAE can be done through the VAT registration portal available on the website of www.tax.gov.ae. The steps to be considered while doing an online registration involves filing:
- About the Applicant
- Details of the Applicant
- Contact Details
- Banking Details
- Business Relationship (optional)
- About the VAT Registration
- Review and Submit
Once the application is submitted, the FTA will review the information and documents submitted, and if everything is found to be satisfactory, the application will be approved, and a Tax Registration Number (TRN) will be allotted.
What is a VAT Certificate?
A VAT Certificate is a document that serves as an official confirmation that a business entity is registered under the VAT law for the purpose of tax collection at every step of product development. This certificate is the final step after the VAT registration process, and is issued by the Ministry of Finance and has got a unique number for different business entities registered. VAT certification certificate UAE is proof of business entities being registered under the UAE Tax Law and assures that the business entity is known by the Government of Emirates. Let’s have a look at the contents of the VAT certificate.
Contents of VAT Certificate
A VAT Certificate holds the following essentials:
- VAT Registration Number
- The date on which the business entity became VAT registered
- Issue date
- Registered address
- First VAT return period
- VAT return due date
- Start and end dates of tax periods
Penalty for Non-Registration under VAT
Any company that misses the VAT Registration Number cutoff date or fails to complete the VAT registration process under the deadline set by the Federal Tax Authority must undergo a fine of AED 20,000. This type of penalty can affect the business in a huge manner.
VAT Group Registration
VAT Group Registration is a tax registration process where two or more business parties club together to form a group, with the motive of paying a single tax. By registering under the Group VAT scheme, the businesses under consideration get a single VAT number and can file a single return. A VAT group allows people and entities that are closely linked financially, economically and organizationally to operate as a single VAT person.
The following prerequisites need to be fulfilled by the concerned parties to form a VAT group:
- Each party should have a place of establishment or a fixed establishment in the UAE ['place of establishment' implies a location where a business is legally established in the UAE or where significant management decisions are taken and central management functions are conducted; 'fixed establishment' implies a location where a person conducts one's business regularly or permanently, including branches]
- The concerned parties should be related at the economic, financial or regulatory level
- One or more persons conducting business in the VAT group shall control the others
JAXA VAT Services
JAXA has been a prominent player in dealing with the accounting and taxation services for business entities be it a startup or an established company. Understanding the importance and need for VAT Services for new and existing business entities, we deliver a wide range of VAT services. A few of these are:
- VAT registration and VAT Group registration
- VAT compliance and control
- VAT filing and payment
- Data record and management
JAXA, since its inception, has been a prominent player in being a business consultant dealing with accounting, taxation services for business entities at a global level. Our team of VAT experts will you’re your business to file the VAT process and frame it in the most beneficial way to reduce your cash outflow during the tax payment stage. To initiate the process, feel free to contact us. We would be happy to assist you and sort your queries.
Who issues Tax Registration Numbers?
Tax Registration Number (TRN) is issued by the Federal Tax Authority.
What is voluntary VAT registration?
Voluntary VAT registration is a process of VAT registration for business entities whose value of supplies/taxable expenses is between AED 187,500 and 375,000, annually. They have the option to register or not register for VAT.