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VAT Registration

Value Added Tax (VAT)

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Value-added tax (VAT) is a tax added at each step of making and selling a product. It starts with the manufacturer and continues until the final sale to the customer. This tax is collected at each point of sale. The United Arab Emirates has a standard VAT rate of 5% on goods and services. However, some things like local transport, certain financial services, medical care, and exports outside the Gulf Cooperation Council may not have VAT or may be exempt. In the end, all these taxes are paid by the person buying the product or service.

VAT Registration UAE

VAT Registration

United Arab Emirates VAT Registration Overview

Being VAT-registered in the UAE under the VAT Act means that the government recognizes a company as someone who sells goods and services and can collect VAT from customers, sending it to the government. Only those with a UAE VAT online number and registered businesses can:

 

  1. Charge VAT on things they sell.
  2. Subtract the VAT they paid when buying things from the VAT they collected from sales.
  3. Pay the VAT they collected to the government.
  4. Regularly submit VAT returns.

 

Additionally, these businesses need to organize their reporting according to rules. This includes keeping accurate and updated books, maintaining tax documents like receipts and credit notes, and tracking both internal and external supply records. Understanding the basics of VAT is crucial for preparing for VAT registration, which is the first step for a business to enter the VAT system.

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VAT De Registration

Effortlessly navigate VAT De-registration with our streamlined service.

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Who should register for VAT registration UAE

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Do all companies have to register for VAT? No, only companies that go beyond a certain total annual sales limit need to. Depending on that limit, a company can register for VAT. Alternatively, a company can choose to apply for registration voluntarily or apply for an exemption from VAT registration.

So, there are three categories for VAT registration in the UAE:

  1. Companies that must register for VAT in Dubai.
  2. Companies that choose to register for VAT voluntarily in the UAE.
  3. Companies that are exempt from VAT registration in the UAE.

Mandatory VAT registration UAE

If a company in the United Arab Emirates has provided goods or services worth more than 375,000 dirhams to other countries in the past year, it’s mandatory for them to register for VAT in the UAE. Moreover, if a company anticipates that its total sales will go beyond the required VAT threshold of AED 375,000 in the next 30 days, it must also register for VAT online in the UAE.

Voluntary VAT registration UAE

Businesses in the United Arab Emirates that aren’t required to register for VAT can still choose to do so voluntarily. They can opt for voluntary VAT registration online if their annual sales or tax expenses exceed a certain amount. The threshold for voluntary VAT registration online is 187,500 dirhams, which is 50% of the mandatory VAT registration threshold in the UAE.

Who should register for VAT registration UAE

VAT exemption registration

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Companies that haven’t reached the self-registration threshold of AED 187,500 through supplies from Member States are not eligible for VAT registration in the UAE. Furthermore, companies exclusively involved in zero-rated supplies can apply for an exemption from VAT registration.

FAQs

There are two steps to applying for VAT registration in Dubai. You must first create an electronic service account and then complete the VAT registration process.

  • Create an electronic service account.
  • VAT registration process

Online VAT Registration Before proceeding to the UAE, you must use an FTA to create an electronic service account. Setting up an online account in an FTA is very similar to setting up other online accounts (Gmail, Yahoo, etc.). To create an account, you need to go to https://eservices.tax.gov.ae and click on the “Register” option in the upper right corner of the screen. To create an eservices account:

  • When you log in to your e-service account, you will see the “Register for VAT” option as shown below.
    Electronic service account login.
  • VAT Registration To start the UAE process, click Register for VAT on the dashboard, as shown in the image above.

Clicking “Register for VAT” will take you to the “Getting Started” as shown below.
Guidance on VAT acquisition
This guide will help you understand some important aspects of UAE online registration in the Bat process. It also provides detailed information about the information required to complete the online VAT registration UAE form. After reading the detailed information on the various parts of the guide, you need to check “Click here to confirm that you have read the Getting Started Guide” and click “Continue”.

After reading the guide and clicking Continue, the VAT registration form will open as follows:

  • VAT registration form:

The United Arab Emirates VAT Registration Online Form has eight sections, and you must enter more information in these sections to complete your VAT registration. Applicants can track the progress of their VAT enrollment using various color indicators. As shown below, parts in progress or parts whose details are updated are shown in “brown” and finished parts are shown in “green” with a checkmark.

VAT Registration form steps

VAT Registration form steps

The portal will only let you proceed to the next section if all the necessary information (marked with a red asterisk (*)) is filled in all the required fields. If you miss filling in some required fields, the portal will remind you with a message specifying the fields that need detailed information.

Now, let’s go through the details to be filled in the various sections of the online VAT Registration form in the UAE:

  1. About the applicant
  2. Applicant Information
  3. Contact details
  4. Bank info
  5. Business relationship
  6. Declaration

 

What is VAT Group Registration?

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UAE VAT registration enables two or more individuals involved in a business to jointly apply for tax registration as a tax group. A tax group is a collection of two or more people registered as a single taxable entity in a free trade area, but they must adhere to the conditions outlined in the UAE VAT Act. It’s important to note that this group registration is solely for tax-related purposes.

VAT group registration application conditions

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To meet the VAT group registration application requirements, all of the following conditions must be met:

  1. Everyone must have a sales office or fixed sales office in this state:
  2. This means that everyone must have one of the following sales offices in the UAE:
  3. Location of establishment: The location where the company was legally established in accordance with the establishment decision in the UAE, or where major administrative decisions are made and central management functions are performed.
  4. Fixed establishments: Fixed establishments other than those in which an individual conducts business on a regular or permanent basis and has sufficient human and technical resources to provide or acquire goods or services. This includes branches and is considered a fixed institution.
  5. The parties involved are related parties.
  6. Related parties here refer to two or more people who are not separated at the economic, financial, or regulatory level. One of them may control the other by law or by purchasing shares or voting rights.
  7. One or more people in the partnership shall control the other.
  8. This means that one or more parties are in control of another business. For example, senior managers or directors of each other’s business, or partners of each other’s business.
  9. VAT group registration map
  10. VAT group registration

VAT group registration right

The following are the benefits of VAT group registration for businesses

I. All entities within a VAT group are considered “one” and one tax identification number (TRN) entity. This simplifies VAT accounting and requires compliance reports (such as VAT returns) to be created and reported at the group level (rather than at the entity level).

ii. All supplies within the VAT group entity are excluded from VAT scope. This means that supplies between VAT groups are not subject to VAT. However, VAT is levied on products provided by the VAT Group to entities outside the VAT Group.

VAT group registration right

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IBZ Consult LLC is offering you a complete package of accounting solutions. We help you in VAT registration, VAT Return Filing, Accounting and Bookkeeping, VAT De Registration, Tax Planning & Filing and more professional services.

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  • Phone: +971 525174272
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