Value-Added Tax or VAT is a form of indirect tax imposed on services and commodities in a multi-stage taxation system as a consumption tax. In a supply chain, whenever a value is added on any commodity at any stage, whether it is manufacturing, processing, packaging, or delivery, a tax value is also added to it which is collected by the government. A consumer pays VAT on the final value of the product to the end retailer.
The UAE government has also adopted the Value Added Tax (VAT) system throughout the country starting January 1, 2018. VAT registration is now mandatory for companies and individuals doing business in the UAE whose turnovers are above the VAT registration threshold value.
Who needs to register for VAT in the UAE?
VAT registration in the UAE is mandatory for a business if its annual turnover is more than AED 375,000. However, any business can register for VAT voluntarily if their annual turnover is less than AED 375,000 but not less than AED 187,500 as decided by the federal tax authority.
The VAT registration process in the UAE
VAT registration UAE is an online process and can be completed on the Federal Tax Authority’s website by following all the processes. If you are new to it, you should consider doing it with the help of any professional chartered accountant for the ease of the process. They will also help you decide whether to register as a tax group or a standalone entity by looking at your business structure. The online portal will also ask you to choose between the voluntary option and mandatory option based on your annual turnover.
Vat registration can be done 24/7 on the Federal Tax Authority’s online portal. It is a 3-step process to complete your VAT registration on the portal including the registration and uploading mandatory documents for the process.
Documents required for VAT registration UAE
Before going through the VAT registration process, make sure you have the scanned copies of the following documents as per your business structure:
- Trade/Business license
- Memorandum of association
- Certificate of incorporation
- Articles of association
- Authorized signatory’s Passport copy, Emirates ID
- Power of attorney
- Description of business activities
- Last 12 months turnover in AED with supporting documents
- Expected turnover in next 30 days
- Bank account details
- Other supporting documents for your business operations and customs registration in each Emirate (consult with your chartered accountant for this)
To start with your VAT registration process, you need to visit the e-Service portal on the FTA website to create an account by filling up mandatory details for the registration. You will receive a verification mail on your registered email-id to verify yourself before login into your account. After this, you can log in to your account to fill the VAT registration form and submit it for approval. You will also be required to attach scanned copies of all the mandatory documents to verify your details and complete the registration process.
If your business’ annual turnover has crossed the VAT threshold limit or you want to do it anyway to increase the value of your company, you can contact professional chartered accountants for VAT registration UAE. They will help you will with the VAT registration process in the country and what documents you will be required based on your business activities.
