UAE Value Added Tax(VAT) has become mandatory for all businesses in the UAE. Hence the companies can register for Vat free of cost as per the guidelines of the Federal Tax Authority( FTA). The applications for the UAE VAT Registration are accepted 24/7 through the official website of the FTA.
The UAE VAT Registration started on January 1, 2018. VAT is an indirect tax imposed on services and goods at each stage of the supply chain. The final consumer ultimately bears the tax, but businesses collect it on behalf of the government. VAT is a significant source of revenue for governments around the world, and the UAE is no exception.
If you are a business owner in the UAE, you must understand the VAT registration process. This article will provide you with a complete guide to UAE VAT Registration.
VAT Registration Threshold UAE
According to the Federal Tax Authority (FTA), businesses that meet the following criteria must be eligible for UAE VAT Registration:
- For UAE VAT Registration, businesses generating an annual income higher than AED 375,000 are mandatory.
- Businesses with annual revenue between AED 187,500 & AED 375,000 are required to register deliberately.
- Businesses that have startups with more than AED 187,500 VAT-related expenses are required for VAT registration.
Businesses that do not come under the threshold for VAT can still consider registering your business voluntarily to avoid any future inconvenience.
How to Register for VAT in the UAE
The registration process for VAT in the UAE is simple and can be completed online through the FTA’s e-services portal. Here are some steps you need to follow for UAE VAT Registration.
1. Create an e-service account
You must create an e-services account on the FTA’s website for UAE VAT Registration. You will need to give your email address and create a password.
2. Complete the registration form.
Once you have created an e-services account, you must log in and complete the VAT registration form. You must give information about your business, such as your trade license number, business name, business activity, and contact details.
3. Submit supporting documents:
You must also submit supporting documents, like your trade license, passport copies of the business owner and authorized signatory, and a copy of your Emirates ID. If your business is registered for Customs, you must also provide your Customs registration certificate.
4. Receive your VAT registration certificate
Once you have completed the registration form and submitted the required documents, the FTA will review your application. You will receive your VAT registration UAE certificate through email if your application is approved.
VAT Registration Dubai
Vat Registration Dubai applies to both natural and legal persons with businesses in the UAE, even if no trade license is obtained.
VAT Registration UAE Fees
The applicant has to pay Dhs 500 to request a registration certificate. UAE VAT registration is free as it is being done in the email Services portal of the Feral Tax Authority.
UAE VAT Registration Penalties
Failing to register for VAT or to file VAT returns on time can result in penalties and fines. Here are some of the penalties and fines that businesses may face:
- Failure in UAE VAT Registration: AED 10,000 for late registration or failure to register for VAT.
- Late filing penalty: AED 1,000 for the first time and AED 2,000 for subsequent times for late filing of VAT returns.
- Incorrect return penalty: AED 3,000 for submitting a false VAT return.
- Failure to maintain records penalty: AED 10,000 for failure to maintain proper records for VAT purposes.
- Administrative penalty: AED 5,000 for other violations of VAT regulations.
To avoid these penalties and fines, businesses must comply with VAT regulations and file their VAT returns on time.
VAT Returns
After UAE VAT Registration, you must file VAT returns regularly. VAT returns are filed quarterly, and the deadline for filing is the 28th day of the month following the end of the tax period.
When filing a VAT return, businesses must report their taxable supplies, imports, and expenses for the tax period. The VAT due for the period is calculated by subtracting the input tax credit (VAT paid on purchases and expenses) from the output tax (VAT charged on sales). If the output tax increases the input tax credit, the business must pay the difference to the FTA. If the input tax credit increases the output tax, the company can carry the excess to the next tax period.
Conclusion
VAT registration is an essential process for businesses operating in the UAE. Businesses meeting UAE VAT registration criteria must register within 30 days to avoid penalties and fines. The registration process is simple and can be completed online through the FTA’s e-services portal. Once registered, businesses must file VAT returns quarterly and comply with VAT regulations to avoid penalties and fines. VAT groups can also be formed to simplify VAT compliance and administration for related businesses. If you are a business owner in the UAE, you must understand the VAT registration process and comply with VAT regulations to avoid penalties and fines.
