The UAE is well known for its incredibly attractive tax environment. As it stands, the country continues to levy 0% tax on both corporate and personal incomes.
However, while the tax landscape may be an attractive one, it’s not true to say that the UAE is tax-free. There is one common tax in place, payable by almost all individuals and many businesses, and that is VAT.
Rolled out on 1 January 2018 at a flat rate of 5%, the new tax was introduced to provide the government with an additional source of income, outside of oil revenues, with which to provide a range of high-quality public services.
If your business is required to pay VAT, you’ll first need to register. To help you in doing so, please follow this simple VAT registration guide.
VAT registration UAE
VAT registration in the UAE is not mandated for all businesses. You must register for VAT in the UAE if your taxable supplies and imports exceed AED 375,000.
It is also possible to register to pay VAT voluntarily if your taxable supplies and imports exceed AED 187,500.
For the purposes of VAT, the UAE Federal Tax Authority (FTA) defines taxable supplies as:
‘A supply of goods or services made by a business in the UAE that may be taxed at a rate of either 5% or 0%. Imports are also taken into consideration for this purpose, if a supply of such goods or services would be taxable if made within the UAE.’
In simple terms, VAT is collected by a business from its customers and paid to the government. Any VAT paid by a VAT-registered business to its suppliers can be reclaimed from the government.
How to register for VAT in the UAE
As with a lot of government admin in this part of the world, the VAT registration process in the UAE is fairly straightforward providing you seek expert advice beforehand.
The first step in the VAT registration process in the UAE is to create an account on the Federal Trade Authority (FTA) website.
This process is also straightforward. First visit eservices.tax.gov.ae and select ‘Sign Up’.
Next, fill in the required details – email address, password, security question etc. Once you have completed this step you will receive a confirmation email to your registered address explaining how to proceed.
With your email verified, you can log in to your e-service account and begin the VAT registration process.
VAT registration UAE requirements
Once you have signed into the FTA e-services portal, you should click ‘Register for VAT’ to get started.
There are several VAT registration UAE documents required to complete your application. These include:
- Personal details
- Contact information
- Banking information
- Business information – including those you have business relationships with
Once you have completed the application, click Submit for Approval.
When you are successfully registered for VAT, you will receive your Tax Registration Number (TRN). This is required when submitting your VAT return.
There are no VAT registration UAE fees payable for using this service.
Deregistering for VAT
Should you ever need to, it is also possible to deregister for VAT. Keep in mind, however, that any company that has registered for VAT voluntarily must stay registered for at least 12 months before applying to deregister.
You should deregister for VAT if:
- Your company stops making taxable supplies.
- The value of your taxable supplies falls below the voluntary threshold.
You do not anticipate your taxable supplies crossing the voluntary threshold within the next 30 days.
How to pay VAT in the UAE
When the time comes to submit a VAT return, you can also do this via the FTA eServices portal.
To submit a return:
- Log in to eServices and click the VAT tab.
- Complete the form including details of your income and VAT calculation.
- Submit your return.
Make your VAT payment.
UAE VAT executive regulations
To ensure businesses in the UAE fully understand the requirements for VAT registration, the Ministry of Finance published its UAE VAT regulations.
The requirements for Mandatory Registration are as follows:
- The Mandatory Registration Threshold shall be AED 375,000 (three hundred and seventy-five thousand dirhams).
- The person required to register for tax pursuant to the provisions of the decree-law must file a Tax Registration application with the authority within (30) days of being required to register.
- Where a person does not file his tax registration application despite being required to, the authority shall register that person with effect from the date on which the person first became liable to be registered for tax and impose the necessary penalties in accordance with the Federal Law No. (7) of 2017 on tax procedures.
- Where supplies made by a person exceed, in accordance with the decree-law, the Mandatory Registration Threshold during the previous 12-months period, the authority shall register the person with effect from the first day of the month following the month in which the person is required to register, whether or not he applies for tax registration, or from such earlier date as agreed between the authority and the person.
- Where a person expects that his supplies, in accordance with the decree-law, will exceed the Mandatory Registration Threshold during the next (30) days, the authority shall register him with effect from the date on which there are reasonable grounds for believing the person will be required to register as specified in that clause, whether or not he so notifies them of the liability to register for tax, or from such earlier date as agreed between the authority and the person.
- Where a person is not a resident of the state and is required to register in accordance with the provisions of the decree-law, the authority shall register him with effect from the date on which he started making supplies in the state, whether or not he so notifies them of the liability to register for tax, or from such earlier date as agreed between the authority and the person.
- A taxable person who has been late in registering for tax according to the provisions of this article is liable to account for and pay to the authority the due tax on all taxable supplies and imports made by him before registering.
Meeting your UAE VAT responsibilities
If you’re armed with the right knowledge, registering for VAT in the UAE doesn’t have to be overly complex.
That being said, it does require a level of prior knowledge of the process. That’s why it’s a good idea to work with a UAE company expert such as Business Incorporation Zone (BIZ) when doing so.
We are a team of company registration professionals who are passionate about bringing the dreams of aspiring entrepreneurs and SMEs to life.
As well as handling your VAT registration process, BIZ can also assist with the formation of UAE free zone and mainland companies, the opening of corporate bank accounts, and advise on the most appropriate financial institution to suit your specific needs.
We also offer visa and immigration services and can handle all government formalities, permissions, work permits and visas applications that are required to trade in the UAE.