Value Added Tax (VAT) Registration Process in the UAE
Introduction to VAT Registration in the UAE
VAT registration in the United Arab Emirates signifies official recognition by the government as a Goods and Services provider, granting the authority to collect VAT from customers and remit it to the government. VAT-registered businesses have specific privileges, including the ability to:
1. Levy VAT on taxable goods and services.
2. Claim Input Tax Credit on VAT paid for purchases, reducing VAT liability on sales.
3. Make VAT payments to the government.
4. Periodically file VAT returns.
Furthermore, registered businesses must align their reporting structures with compliance requirements, maintaining accurate records such as tax invoices, credit notes, debit notes, and records of inward and outward supplies.
Understanding the fundamentals of VAT is crucial for VAT preparation, with obtaining VAT registration being the initial step towards transitioning into the VAT era.
Who Must Register for VAT?
Not all businesses are required to register for VAT. Only those exceeding the defined annual aggregate turnover threshold are obligated to register. Based on this threshold, businesses can either be mandated to register, choose to apply for registration, or seek exemption from VAT registration. In the UAE, VAT registration can be categorized into the following:
1. Mandatory VAT Registration
2. Voluntary VAT Registration
3. Exemption from VAT Registration
VAT Registration Deadlines in the UAE
As the UAE implemented VAT on January 1, 2018, the Federal Tax Authority (FTA) initiated online VAT registration. The early opening of the registration portal allowed businesses to prepare well in advance and be ready for VAT implementation. The registration process depends on the business’s turnover, and the FTA has introduced specific deadlines.
VAT Turnover Calculation for Registration in the UAE
For VAT registration in the UAE, businesses with an annual turnover exceeding AED 375,000 (mandatory registration threshold) or AED 187,500 (voluntary registration threshold) can apply for registration. It’s essential for businesses to understand which supplies are included in the annual turnover and how to calculate VAT turnover for registration purposes.
How to Apply for VAT Registration in the UAE
In the UAE, businesses with a turnover exceeding AED 375,000 must apply for VAT registration. The Federal Tax Authority (FTA) offers an online platform for Value Added Tax (VAT) registration. The registration process, including deadlines based on turnover, has been announced by the FTA. It’s crucial for businesses to comprehend their VAT registration obligations and understand how to complete the online registration process with the required details.
To streamline the process, having a clear understanding of the information required and the steps involved is essential. This approach will prevent registration delays due to incorrect information, which could result in rejection of the application.
The process includes the following steps:
1. Creation of an e-Service Account
2. Logging into your e-Service Account
3. Completing the online VAT registration form, which comprises eight sections, detailing applicant information, contact details, banking information, business relationships, and other essential data.
VAT Group Registration
In the UAE, each business entity conducting operations is allowed only one Tax Registration Number (TRN), except as otherwise specified in the UAE Executive Regulation. This means that even if a business operates in multiple emirates, only one VAT registration is required. To accommodate related or associated parties in businesses, the option of VAT group registration is available.
For further details on VAT registration in the UAE, refer to the relevant resources provided.
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