Dubai is well-known across the globe as one of the most important business centres in the Middle East. Even during the epidemic, hundreds of new businesses are being established on a daily basis, because to the city’s outstanding reputation as an entrepreneur- and investor-friendly location. Due to the fact that the UAE government has done and continues to do a fantastic job in controlling the epidemic and ensuring the safety of all people who live in and visit the UAE. The government also launched a number of comprehensive stimulus programmes to assist UAE companies that had been negatively affected by the epidemic.
As a new entrepreneur looking for UAE VAT registration services in Dubai, it is critical that you determine if your company is eligible for or needed to register for VAT in the United Arab Emirates (UAE). You should also be aware of the many kinds of VAT registration services available in the United Arab Emirates. The Federal Tax Authority is the federal agency in charge of administering the Value Added Tax (VAT). When applying for VAT registration services in Dubai, new companies must meet a set of qualifying requirements that have been established by the government.
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VAT in the United Arab Emirates
VAT, or Value Added Tax, is an indirect tax levied on the purchase and sale of goods and services in the United Kingdom. VAT, one of the most prevalent forms of consumption tax, has been implemented by more than 150 nations across the world, making it one of the most widespread types of consumption tax. Typically, the ultimate consumer in the supply chain is the one who pays the VAT cost in the VAT collecting process, according to the IRS.
VAT was implemented in the United Arab Emirates on January 1, 2018, and it is imposed on both imports of goods and services. The Federal Tax Authority (FTA) will serve as your tax collector on behalf of the government after you have completed the VAT registration procedure in the United Arab Emirates. You will collect the tax from your end customers and remit it to the government. In addition, your company may be able to seek a reimbursement from the government for the taxes it has paid to your suppliers.
VAT for Businesses in the United Arab Emirates
Businesses in the United Arab Emirates that sell taxable products and services are required to register for VAT. It does not matter whether your firm does business on the UAE mainland (onshore) or in UAE free zones; if you satisfy the eligibility requirements set out by the FTA, you will be required to register for VAT registration services in the UAE.
‘A VAT registration includes ALL of the commercial operations performed by the registered individual, according to the Federal Tax Authority,’ according to the Federal Tax Authority.
Obtaining a Tax Registration Number (TRN) for your Dubai company is required to ensure compliance with UAE VAT regulations if your UAE firm qualifies for the obligatory registration threshold under the UAE VAT legislation. A Tax Registration Number is a 15-digit number that is issued by the Federal Tax Authority to any vendor or business that registers for tax reasons in the United Arab Emirates (UAE). The TRN is given after you have completed the procedure of registering for VAT in the UAE. The TRN is essential for the following reasons:
enables you to claim input VAT on your company costs and apply for VAT refunds as evidence of your formed and operational business status allows you to claim input VAT on your business expenses and seek for VAT refunds
VAT returns filing is made easier, and businesses are able to collect UAE VAT on sales and remit it to the UAE government in accordance with UAE VAT rules and regulations.
VAT Registration Services in Dubai are available in a variety of forms.
The Federal Tax Authority’s VAT qualifying requirements are based on a company’s yearly revenue and taxable expenditures for the preceding year, respectively.
In the United Arab Emirates, there are two kinds of VAT registration services:
Registration for Value Added Tax (VAT) is required.
VAT Registration on a Discretionary Basis
In the United Arab Emirates, VAT registration is mandatory.
Individuals or businesses with an annual turnover of AED 375,000 or more are subject to this taxation. If your company falls under this category, you will be needed to get a Tax Registration Number (TRN) in order to do business in the United Arab Emirates. You will then be able to charge VAT on your goods and collect VAT on behalf of the Foreign Trade Administration.
If you meet any of the following requirements, you are entitled to apply for Mandatory VAT Registration:
Your company’s turnover and imports totaled more than AED 375,000 in the last 12 months OR you expect that your company’s turnover and imports totaling more than AED 375,000 in the next 30 days will be more than AED 375,000.
VAT Registration in the United Arab Emirates on a voluntary basis
Individuals or businesses with an annual turnover of more than AED 187,500 but less than AED 375,000 are eligible to apply for it. If your company falls into this category, you may choose to apply for VAT registration and get a TRN on your own initiative. If you opt not to register for VAT, you will not be subjected to a fine or suffer any legal ramifications as a result.
If you meet any of the following requirements, you may be qualified to apply for Voluntary VAT Registration:
Your company’s turnover, taxable business expenditures, or imports totaled more than AED 187,500 in the last 12 months OR you expect that your company’s turnover, taxable expenses, or imports totaling more than AED 187,500 in the next 30 days.
Here is a brief comparison of the two kinds of VAT registration services in the United Arab Emirates that are based on yearly revenue: annual turnover and non-annual turnover.
| MANDATORY VAT REGISTRATION | VOLUNTARY VAT REGISTRATION |
|---|---|
| Registration threshold is AED 375,000 |
Registration threshold is |
| It is mandatory | It is optional |
| Applicable if last 12 months’ turnover or imports were or exceeded AED 375,000 | Applicable if last 12 months’ turnover or taxable expenses or imports exceeded AED 187,500 |
| Applicable if your turnover in the next 30 days is expected to be more than AED 375,000 | Applicable if your turnover in the next 30 days is expected to be more than AED 187,500 |
| Non-registration within stipulated time will result in payment of fine | No fine or penalty associated with non-registration |
VAT Penalties in the United Arab Emirates for Non-Registration
The UAE VAT Law mandates that every company that is qualified for obligatory VAT registration do so within the time period set by the Federal Tax Authority (FTA). Failure to do so will result in a fine for failure to comply with the process.
If your company’s annual revenue reaches or exceeds the required VAT registration level, you have 30 days from the date of attaining the threshold to register for VAT and receive a Tax Identification Number (TIN). If you fail to register within these 30 days, your company will be subject to a late registration fee of AED 20,000, which will be passed on to you.
VAT Registration in the United Arab Emirates for International Businesses
If you are a non-resident of the United Arab Emirates, that is, if you do not have a place of business or fixed establishment in the UAE, and your company is based outside the UAE, your business is classified as an international company, a foreign or non-resident business, or a foreign or non-resident enterprise.
If you are an international business that sells or expects to sell products or services in the United Arab Emirates, and if there is no other person who accounts for the VAT payable in the UAE on your behalf, you are obliged to register for VAT and get a Tax Registration Number from the UAE government.
VAT Registration for Amazon Sellers in the United Arab Emirates
Vendors and businesses based outside of the United Arab Emirates that want to sell their goods or services in the UAE via e-commerce platforms like as Amazon and Noon must first register their firm with the FTA before they can begin selling their products or services in the country.
As an Amazon or Noon seller, you may begin selling only once you have completed the VAT registration procedure in the UAE and obtained your TRN. If you register your business after you have made sales, your company will be subject to a significant fine. In addition, the need of a minimum turnover does not apply to these platforms in any way.
Conclusion
When establishing a new company in Dubai, there are many considerations to make before submitting an application for VAT registration services. Connect with us today for a more in-depth discussion about how to register your company for VAT in the United Arab Emirates, what are the exemptions for UAE VAT registration, or to learn more about how Generis Global can assist you with your VAT registration requirements in the United Arab Emirates, VAT compliance, and VAT refund processing. Begin right now! Make an appointment for a FREE VAT consultation with one of our VAT and tax specialists.