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Criteria for Registering for VAT
April 18, 2025
Admin
When Must Businesses Register for VAT?
Mandatory Registration:
UAE-based businesses must register if their taxable supplies and imports exceed AED 375,000 annually.
Non-UAE-based businesses must register if they make taxable supplies in the UAE, regardless of the value, and no other entity is responsible for paying the tax.
Voluntary Registration:
Businesses can opt to register if their taxable supplies and imports exceed AED 187,500 annually.
How VAT is Managed :
Collection and Payment: Businesses collect VAT from customers and remit it to the government.
Refunds: Businesses can reclaim VAT paid on purchases from suppliers.
VAT for Foreign Businesses:
Foreign businesses visiting the UAE can recover the VAT they incur.
Registering for VAT
Registration is done through the eServices section of the Federal Tax Authority (FTA) website, requiring account creation first.
VAT Collection Details:
Rate: VAT is charged at 5% on taxable goods and services throughout the supply chain.
Consumer Impact: Consumers pay VAT as part of the price of goods and services.
Tourists: VAT is charged to tourists at the point of sale.
Businesses Affected by VAT:
Designated Free Zones: Special VAT rules apply, but businesses in these zones must register if they meet the registration criteria.
Impacts of VAT:
Individuals: May experience a slight increase in living costs, varying with spending habits.
Businesses: Must document income, expenses, and VAT, and report this information to the government.
VAT Reporting:
VAT-registered businesses must:
Charge VAT on taxable supplies.
Reclaim VAT on business-related purchases.
Maintain detailed records for government audits.
Submit regular online VAT reports to the government.
VAT in the GCC:
The UAE coordinates VAT implementation with other GCC countries based on regional economic agreements.
For more detailed guidance, consult the VAT user guide and resources provided by the Federal Tax Authority.
