Value Added Tax (VAT)
Value-added tax (VAT) is a tax levied on each value-added level of a product throughout the supply chain. It is collected from each point of sale of the manufacturer until it is sold to the final consumer. This is done by allowing adjustments to the taxes paid for purchases known as “input tax credits” or also known as “input value-added tax”, while the VAT on sales is called “input value-added tax”. Ultimately, all taxes are paid by consumers.
The UAE will impose a standard tax rate of 5% on the supply of goods and services. However, certain supplies, such as local passenger transportation, designated financial services, medical care, exports outside the Gulf Cooperation Council, etc., will be zero-rated or exempt from VAT in the UAE.
The first is to ensure that all financial transactions are recorded and that the account books are accurate and up to date. This is because the account books will serve as the basis for the minimum turnover threshold for the registration year. On this basis, you will be require registration of vat or can request an exemption from VAT Registration UAE.
Secondly, ” VAT Preparation “ means that you must collect value-added tax on the supply of taxable goods and services, and pay the paid value-added tax at the time of purchase so that you can claim input tax deductions. Finally, you must regularly submit a VAT declaration online The table discloses details of the VAT collected and paid.
VAT REGISTRATION UAE
Introduction to UAE VAT Registration
VAT Registration UAE under the VAT law means that the company is recognized by the government as a supplier of goods and services, and is authorized to collect VAT from customers and remit it to the government. Only UAE VAT Registration online Number holder and registered enterprises can perform the following operations:
- VAT is charged for the supply of taxable goods and services
- The input tax credit of the purchase will be deducted from the input tax credit, which will be deducted from the sales value-added tax
- Pay value-added tax to the government
- Submit VAT return regularly
In addition to the above, all UAE VAT Registration online number holder and registered businesses must adjust their business reporting structure according to compliance requirements, such as accurate and updated account books, tax paid documents (such as tax receipts, credit notes, debit notes), all inward supply records, and Need to maintain external supply, etc.
Therefore, understanding the basic knowledge of VAT will be one of the important steps for you to prepare for Registration of VAT , and obtaining VAT Registration will be the first step for your business to transition to the VAT era.
Who Should Register for VAT Registration UAE
Are all companies responsible for registration of VAT? No, only companies that exceed the prescribed annual total turnover threshold can be registered under the value-added tax. According to the registration threshold, the company will be authorized to registration of vat , or alternatively, the company can apply for registration or can apply for VAT exemption registration
On this basis, VAT Registration UAE can be divided into the following categories:
- Compulsory VAT Registration Dubai
- Voluntary VAT Registration UAE
- Exemption from VAT Registration UAE
Mandatory VAT Registration UAE
All companies that have a place of residence in the UAE state and have supplied more than AED 375,000 in the value of goods in the member states in the past 12 months are required to register for VAT UAE . In addition, if companies expect that the total value of their supplies will exceed the mandatory VAT Registration of vat threshold of AED 375,000 within the next 30 days, they will also have to register under the UAE VAT Registraion online
Mandatory VAT Registration UAE
In the past 12 months, the resident value of the supplies exceeded AED 375,000. It is expected to exceed 30 days in the current fiscal year. Types of threshold conditions for business registration-The threshold limit for non-residents is not applicable. Regardless of the threshold, registration of vat must be compulsory under UAE VAT Registration online of VAT.
Voluntary VAT Registration UAE
All companies that have a place of residence in the UAE and do not require mandatory UAE VAT Registration can choose to apply for UAE VAT Registration online voluntarily. Only if the annual supply or taxable expenses are not less than this, can this be done higher than the threshold for voluntary vat registration? The voluntary UAE VAT Registration online threshold is 187,500 dirhams, accounting for 50% of the mandatory VAT Registration UAE threshold.
Voluntary VAT Registration UAE
In the past 12 months, the value of supplies/taxable expenses exceeded AED 187,500
It is expected to exceed 30 days in the current fiscal year
Here, VAT Registration UAE is not compulsory. For companies, deciding whether to register is optional. Including taxable fees as a criterion for determining eligibility for voluntary registration provides all start-ups with the opportunity to register for VAT. This is because, as a start-up company, the turnover or value of the supply may decrease, but it is very likely that a large amount of taxable expenses will be incurred in the beginning of the business or the beginning of the business. As a result, using taxable fees as a criterion for voluntary VAT Registration UAE will enable all start-ups to register with zero turnover.
VAT exemption Registration
Companies whose supply value from member states is below the voluntary registration threshold of AED 187,500 are not allowed to register for VAT in UAE . In addition, companies that are only engaged in zero-rated supply can request VAT Registration exemption
How to apply for VAT Registration in the UAE
There are two steps to apply for VAT Registration in Dubai. First, you must create an electronic service account, and then you must complete the VAT Registration process.
- Create an electronic service account
- VAT Registration process
1. Create an electronic service account
Before proceeding with online VAT Registration UAE, you must create an electronic service account using FTA. Setting up an online account in FTA is very similar to setting up other online accounts (such as Gmail, Yahoo, etc.). To create an account, you need to visit “https://eservices.tax.gov.ae” and click on the “Register” option in the upper right corner of the screen. Here are the steps involved in creating an eservices account.
2. VAT Registration UAE process
To apply for VAT Registration, you need to log in to your e-service account with your login credentials. The step-by-step details on how to apply for VAT Registration UAE are provided below.
1. Log in to your e-service account
After logging in to your e-service account, you will be able to see the “Register for VAT” option as shown below:
Electronic service account login
To start the VAT registration UAE process, click “Register for VAT” on the dashboard, as shown in the image above.
2. Introduction to Value Added Tax
After clicking “Register for VAT”, you will navigate to the “Getting Started Guide” as shown below:
Guidance on obtaining VAT
This guide can help you understand some important aspects of the UAE online registration for vat process. It also provides detailed information about the information required to complete the online VAT Registration UAE form. After reading the detailed information in the different parts of the guide, you need to check “Click here to confirm that you have read the Getting Started Guide” and then click “Continue”.
3. VAT Registration form
After reading the guide and clicking “Continue”, the VAT Registration form will open as shown below:
VAT Registration form
The UAE VAT Registration online form contains 8 sections, and you need to provide detailed information in this section to complete the VAT Registration. Applicants can track the progress of the VAT Registration through different colour indicators. The part that is in progress or the part whose details you want to update will be indicated in “brown”, and the completed part will be indicated in “green” with tick marks, as shown below:
VAT Registration form steps
The portal will only allow you to go to the next section if the detailed information (indicated by a red asterisk (*)) is captured in all required fields. If one or some required fields are not captured, the portal is designed to remind you with a message indicating the relevant fields for which detailed information must be captured.
Let’s discuss the details to be captured in the different sections of the online vat Registration form UAE.
About the applicant
To Know more about VAT Registration Deadline
VAT GROUP REGISTRATION
What is VAT group Registration?
In the UAE VAT Registration, two or more persons engaged in business can apply for tax registration as a tax group. A tax group is a group of two or more people who are registered as a single taxable person in the free trade zone, but they must meet the conditions set by the UAE VAT Law. This group registration is for tax purposes only.
Conditions for applying for VAT group Registration
To meet the conditions for applying for VAT group registration, all the following conditions must be met.
1. Everyone should have a business office or fixed business office in this state:
This means that everyone should have any of the following business offices in the UAE:
Place of establishment: The place where the company is legally established in the UAE according to its establishment decision, or where major management decisions are made and central management functions are performed.
Fixed place of business: Any fixed place of business other than the place of business in which the person conducts business regularly or permanently and has sufficient human and technical resources to enable the person to provide or obtain goods or services. This includes branches and is also considered a fixed institution.
2. The relevant personnel are related parties:
The related party here refers to two or more people who are not separated at the economic, financial or regulatory level. One of them can control others by law or by purchasing shares or voting rights.
3. One or more persons in the partnership shall control others:
This means that one or more related people control another business. For example, senior managers or directors of each other's business, partners of each other's business, etc.
VAT group Registration map
VAT group Registration
VAT group Registration rights
The following are the benefits of VAT group Registration for businesses
i. All entities in the VAT group will be considered "one" one Tax Registration Number (TRN) entity. This will help companies simplify the accounting for VAT, and also need to prepare and report compliance reports (such as VAT returns) at the group level (rather than the entity level).
ii. Any supplies within the VAT group entity are excluded from the VAT scope. This means that supplies between VAT groups will not be subject to VAT. However, goods provided by the VAT group to entities outside the VAT group are subject to VAT.