Value Added Tax (VAT), an indirect tax levied on 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 of the world. The Emirates have got several zones that have been considered as a business free-tax zone that became the center of investment for foreign investors. If your business is registered under VAT law, it signifies that it holds a 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 a 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.
Who Can Register for VAT?
Registration of business entities for VAT depends on the income generated by the business. The slab for entities who will become responsible for VAT Registration are as follows:
Businesses having taxable supplies and imports above AED 3,75,000
Mandated to file for VAT
Businesses having taxable supplies and imports between AED 187,500 and 3,75,000
Can voluntarily file for VAT
Businesses having taxable supplies and imports less than AED 187,500
Not required to file for VAT
Importance of VAT Registration
Most important reasons that define why VAT registration is considered as an essential part are:
- It boosts the business profile
- It averts financial penalties
- One may claim for VAT refunds
- It helps to grab a mass market
VAT Registration Process in UAE
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 VAT Number. The entire registration process takes place on an online platform. Let’s have a look at the documents.
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
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:
- Applicant details
- Bank details
- Contact details
- Business relationships
Once the registration is done, a Tax Registration Number (TRN) shall be received.
What is VAT Certificate?
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 a 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
- Date on which the business entity became VAT registered
- Issue date
- Bank details of the company
- Trade classification – SIC code
Types of VAT Certificate
The VAT certificate issued by the Ministry of Finance UAE is of two types:
1. Value Added Tax (VAT Certificate)
This certificate is issued with the main aim to exempt themselves from the VAT. It is applicable to government entities, registered companies, and residents of the Emirates.
2. Tax Domicile Certificate or Tax Residency Certificate (TRC)
This certificate is issued mainly to avoid the double taxation that takes place between business entities situated in different nations during import and export procedure.
VAT Registration Charges and Penalties in UAE
The VAT registration fee in UAE is AED 500 + Professional Charges. Moreover, any company who missed the VAT Registration Number cutoff date or failed to complete the VAT registration process under the deadline set by the Federal Tax Authority must undergo a penalty fine of AED 20,000.
VAT Group Registration
VAT Group Registration is a tax registration process where two or more business parties club together to form a group, with a motive of paying a single tax is known as VAT Group.
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. Few of these are:
- VAT registration and VAT Group registration
- VAT compliance and control
- Filing and payment
- Data record and management
- Supplier management
- Customer 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 tax payment stage. To initiate the process, feel free to contact us. We would be happy to assist you and sort your queries.
What is SIC code?
Standard Industrial Classification (SIC) code describes the business activities and eases out the process for third parties to find your business. It is made available to the public.
Who issues Tax Registration Number?
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 earning between AED 187,500 and 3,75,000 annually. They have the option to register or not to register for VAT.