Professional VAT Registration Services in Dubai

The United Arab Emirates introduced Value-Added Tax (VAT) on 1st January 2018, making it an integral part of its tax system. The key aim of implementing this tax is to diversify the economy and add new revenue sources for the government. Although the impact of VAT is almost similar for both businesses and consumers, navigating its complexities can often be tough and overwhelming for businesses. Seeking VAT registration services Dubai can help them understand why VAT registration matters, who needs to register, and how it can be done.

Understanding Value Added Tax in the UAE

VAT, also known as consumption tax, is an indirect form of tax charged on the value of goods and services at each stage of the supply chain. This means the tax is borne by the end consumer of the product, that is, the customer. The businesses charge VAT at the point of sale, collect it from the customer, and remit it to the Federal Tax Authority (FTA).

VAT was introduced in the UAE as part of a broader initiative to reduce the nation’s dependence on oil income and diversify revenue sources for the government. According to the VAT law, businesses are required to register for VAT with the FTA to charge VAT on taxable supplies (output tax) and reclaim VAT paid on business-related purchases (input tax).

Importance of VAT registration services Dubai

Businesses seeking VAT registration in Dubai need to be well aware of its benefits, which are:-

Legal compliance: VAT registration services Dubai help businesses comply with the tax laws and avoid foreseeable risks and unwanted penalties. This facilitates financial prosperity and business reputation.
Enhanced financial management: VAT registration in Dubai encourages a practice of financial record-keeping in adherence to FTA regulations. Businesses are required to maintain precise records of their VAT-inclusive transactions to ensure accurate and transparent tax reporting on eligible supplies and imports and effective management of cash flow.
Government benefits: VAT registration services Dubai enable businesses to capitalize on potential tax refunds and various government incentives. If their input tax surpasses their output tax, they can qualify for a VAT refund, which eventually benefits their financial strategy and reduces their overall tax liability.

VAT Registration in Dubai: Who should Register?

Both local companies and international businesses operating in the Emirates are required to register for VAT within 30 days of their taxable supplies crossing the mandatory registration threshold.

1. Mandatory registration

If the taxable supplies exceed AED 375,000 within the previous 12 months.
If the business anticipates surpassing this limit in the next 30 days.

Businesses that fail to complete their VAT registration under these circumstances will have to face severe penalties.

2. Voluntary registration

If the total value of taxable supplies is between AED 187,500 and AED 375,000.
Beneficial for startups and small businesses, allowing them to claim input tax credits on VAT purchases.

3. Supplies exempted from UAE VAT

As per the UAE Federal Decree-Law No. (8) of 2017, the following sectors are exempt from undertaking VAT registration services Dubai or filing the VAT returns:

Bare Land: The supply of bare land, such as undeveloped plots.
Provision of Financial Services: Financial services that are not delivered for an explicit fee, discount, commission, rebate, or similar consideration.
Local Passenger Transport: Buses, taxis, metros, or other transport services that provide passenger transportation within the UAE.
Residential Properties: The lease and sale of residential buildings, except for zero-rated.

VAT registration services Dubai: Step-by-step process to ensure compliance

VAT registration is a defined procedure that involves some basic steps:-

1. Eligibility Check: Start by determining the eligibility of the business for VAT registration, depending on whether the annual taxable turnover crosses the specified limit.

2. Document Preparation: Gather the necessary documents and information which include:-

A trade license copy
Passport or Emirates ID copies of authorized signatories
Contact details of the company, such as address, PO Box, etc.
A bank letter verifying the bank account details of the company
Articles of Association or Partnership Agreement (if applicable)

3. FTA Account Creation: Visit the official online portal of the FTA and create an e-Service account. Through this account, you can access the registration form and other VAT services.

4. Form Completion: Log in to the e-Service account and fill out the registration form with details about the business, its activities, income, and bank details.

5. Application Submission: Fill out the application form and submit it. Prior to the submission, make sure to review it for accuracy.

6. Payment: You can find clear instructions on the website about the fee amount and payment methods available. Pay the registration fee, as requested.

7. Supporting Documentation: Provide the supporting documents to help the FTA verify the information provided in the application.

8. Application Review: Once the application is reviewed and approved, the FTA will issue a Tax Registration Number (TRN) to the company along with a VAT Certificate, which is further used by them for tax purposes.

Documentation required

The comprehensive list of documents required for the process includes:-

Trade License: A valid document that proves the legitimacy of the business in the UAE.
Memorandum of Association (MOA): The document defining the structure of the company and the roles and responsibilities of its associated members.
Bank Account Details: Full details of the company’s bank account to track transactions related to VAT.
Email ID and Contact Details: The email ID and contact details of the company for communicating with the FTA.
Office Address: The registered office address to confirm the location of the business.
Yearly Turnover Report: A report of the yearly turnover of the company to determine its eligibility for VAT registration.
Customs Details: Required for businesses involved in import or export.
Emirates ID: Copies of the Emirates IDs of all business partners.
Power of Attorney Documents: Power of Attorney, in case someone else is registering on behalf of the company.
Club, Charity, or Association Registration Documents: Additional registration documents, if the business is registering a club, charity, or association.
Other Documents: Additional documents or information as requested by the FTA.

Maintaining compliance post-registration

Businesses in the UAE must follow the best practices to ensure compliance post-registration.

Charge VAT as required: VAT-registered businesses must charge VAT by adding the standard VAT rate to their sales price. They must also display the imposed tax on their invoices.
Keep detailed records: Maintain accurate records of the income, costs, and associated VAT charges for at least five years, as recommended by the FTA. This will further help calculate the VAT liability and complete VAT returns.
Submit timely returns: Submit timely VAT returns to the tax authorities, briefing the VAT charges and deductions for a specific tax period.
Issue VAT Invoices: Issue invoices for all taxable supplies, including details like the date of issue, a unique identification number, the Tax Registration Number (TRN), and more.
Comply with FTA Regulations: Ensure adherence to all FTA regulations, including rules regarding invoice formatting, record keeping, and VAT return filing.

Streamline your VAT registration

If you want to ensure accurate VAT calculation and avoid any issues later, reach out to our tax experts who provide exceptional VAT registration services Dubai and all other kinds of VAT-related services, including VAT compliance, VAT deregistration, VAT payment, and return filing, and more.

For any queries regarding UAE VAT laws and VAT responsibilities for businesses in Dubai, feel free to connect with our tax advisors.

Professional VAT Registration Services in Dubai | Complete Guide