VAT Registration in UAE

How to apply for VAT Registration in Dubai and Abu Dhabi?

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INTRODUCTION

VAT was introduced in the UAE on 1st of January, 2018 to diverse its source of income for the benefits of public. VAT was applicable at a standard rate of 5%. Registering under VAT in Dubai means getting recognized by the government of the UAE as an authorized supplier of goods and services. As per FTA, only possible to collect VAT after registration under VAT. Also, it demands proper maintenance of books of accounts and other records for proper compliance under law in order to avoid penalty.

Who needs to get registration under VAT?

Registration under VAT is both mandatory and voluntary. A business entity must get itself registered under VAT laws if its aggregate taxable supplies exceed AED 375,000 in a year. However, a business entity may get itself registered under such law voluntarily if its aggregate taxable supplies exceed AED 187,500 in a year.

A business entity may also get itself registered voluntarily under VAT if its expenses exceed the threshold of AED 187,500. Also, if a business entity is engaged only in the supply of Zero Rated Supplies then, it can also claim exemption from registration.

Understanding the calculation of VAT registration Threshold

A person is mandatory required to get registered under VAT in the UAE under 2 scenarios:

  1. If it’s aggregate taxable supplies exceed AED 375,000 during the last 12 months.
  2. Or, whether it is anticipated that its aggregate taxable supplies will exceed AED 375,000 in the next 30 days.

VAT registration threshold will include the following:

  1. All supplies of goods and services on which VAT is levied @ 5%.
  2. Zero Rated Supplies.
  3. The supplies on which VAT is charged under reverse charge.
  4. Imports.

Benefits under registration under VAT in Dubai

Only businesses which are registered under VAT are authorized for the following:

  1. Charge VAT on supply of goods and services.
  2. Claim ITC on VAT paid on purchases.

Consequences for Non-registration

Whenever a person becomes liable to get register under VAT laws, i.e. when it exceeds the threshold, then it must get itself register within 30 days.

However, the business entity fails to get its registration done within the stipulated time, and then it has to face the following consequences:

  1. Authority will get such person register compulsorily.
  2. Penalties for non registration.
  3. Liable to pay tax on supplies made for the time period in which he was liable to get registered.

Apply for registration

A business can get itself register for VAT through e-services section on the FTA Website. The steps for the same are :

  1. Sign up or Login into e-services account in the FTA website
  2. If, you are a new user then, register yourself first by following the registration procedure and verifying your e-services account. (Note: You have to verify your account within 24 hours of receiving the link, otherwise the link will expire and you need to login again).
  3. If you already have an account or after creating one, simply login to your account.
  4. With time and again, you can change your e-mail address on the portal by attaching some supporting documents as stated in the site.
  5. After login, you will see a box with a message to click on the button if you want to “register under VAT”.
  6. In order to get the registration done, fill up all the 8 sections by following the stated
  7. Registration can also be amended without any approval as and when required. However, there are some amendments which require approval from FTA.

For more information on this topic, please visit our Insights Section or Contact Us.

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