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VAT Registration in the UAE

VAT Registration in the UAE

The UAE has resolved to introduce VAT from the beginning of January 2018. All onshore companies in the UAE have to register to receive the VAT number.

The companies the taxable revenue of which surpasses AED 375.000,- mark per annum are obliged to file the VAT tax returns.

The companies the taxable revenue of which is less than AED 375.000,- mark per annum but more than AED 187,500,- can decide if they want to file tax returns or not. If no tax returns are filed, means such companies also cannot claim any VAT back.

Companies with the taxable income below AED 187,500,- do not need to file tax returns. However they still must register for the VAT number.

IMPORTANT - to omit penalties the registration /application for the VAT number must be done by ALL ONSHORE COMPANIES before the end of the year 2017.

New taxation rules are available online on the web site of the Ministry of Finance of the UAE. The registration procedure is not very complicated. The VAT registered company will be provided with the eleven digit VAT number for registration purposes. The rate of VAT in the UAE is 5%. All issues related to VAT are subject to be regulated by the Federal Taxation Authority. It is in charge of handling a wide range of issues including the ones linked to the implementation, collection, and administration of VAT procedures.

FTA services are available online 24 hours. It promotes the ease of doing business. The website is very user-friendly and convenient and is being developed with the aim to meet international standards. The employees working in FTA are ready to provide guidance and instruction to everyone who needs such.

The UAE government encourages entrepreneurs and investors to find out more about VAT and possible difficulties connected with it. If a legal entity understands these peculiarities, its procedures will be in harmony with the reporting VAT requirements.

Tax authorities of the UAE will collect VAT either on a monthly or quarterly basis. There are two ways to calculate it – by the formula of output or input tax. Every company is required to keep its records for at least five years. These are balance sheets and records on payroll or fixed assets.

Some legal entities may be required to make alterations in their core operations and other procedures to apply VAT procedures. This can affect the way they keep accounting or influence the technology they use. Other possible changes may involve additional human resources.

The VAT tax returns apply only to the onshore companies which have the VAT taxable income in the UAE.

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