VAT Registration process for new businesses in the UAE

Embarking on a UAE business journey ? Familiarize yourself with the VAT registration process in the UAE. VAT was implemented in 2018 by the UAE to bring the country in line with international standards. Since then, it has impacted businesses of all sizes, making it a significant part of the UAE’s taxation landscape. To ensure compliance with the UAE regulations and engage in seamless business operations, it is important that one thoroughly understands the VAT registration process.

VAT REGISTRATION IN THE UAE: IS IT MANDATORY?

Despite an attractive tax landscape, VAT registration is mandatory for every business in the UAE whose annual taxable imports and supplies surpass a total of AED 375,000. Additionally, a business may also choose to voluntarily register itself under VAT if the total value of its taxable supplies exceeds the threshold of AED 187,500. Voluntary registration allows businesses to reclaim VAT that their suppliers charged during the transactions. However, one should keep in mind that voluntary registration mandates charging VAT on taxable supplies. Voluntary registration in the UAE can also be looked upon as a strategic decision to enhance its credibility in the market.

While consumers in UAE bear an additional 5% VAT on taxable goods and services, registered businesses on the other hand act as tax collectors for the government which in turn helps them recover the tax paid to suppliers. It is also possible for international companies in the UAE to reclaim incurred VAT

HOW TO REGISTER FOR VAT IN THE UAE?

To register your business for VAT, you need to access the Federal Tax Authority’s (FTA’s) online VAT registration portal, which eliminates the need for manual forms or in-person visits. The VAT registration process is simple and straightforward, allowing businesses to save time and effort. It can be completed in the following steps:

Step 1: Visit the FTA website (https://www.tax.gov.ae/en/) and select the “eServices” tab

Step 2: Click on “New User Registration” if you want to create a new account

Step 3: You will receive an email shortly after you register which will allow you to verify your account using the user credentials

Step 4: Once your account is activated and logged in, you will be required to navigate to the ‘VAT’ section and select the ‘VAT registration’ following which you will be required to choose the registration type ( mandatory or voluntary)

Step 5: Upload supporting documents to validate the existing information including

1. Emirates ID
2.  Passport copy
3.  Trade license
4.  Other important documents required to conduct trade within the UAE

Step 6: Provide additional details about your business, including it’s name, business type, trade license number, turnover figure, and contact details

Step 7: After furnishing all the information, carefully review the application to ensure accuracy and correctness

Step 8: Click on ‘SUBMIT’ to complete your application process

Step 9: Your application will be reviewed by FTA once you complete the registration process and if everything is alright, your application will be approved, and you will be eligible to receive a VAT registration certificate within the next 20 business days

ALSO READ: How To Get a Golden Visa in UAE

WHO IS EXEMPTED FROM VAT IN THE UAE?

VAT applies to most goods and services in the UAE. However, certain items are either exempt or taxed at zero rate, subject to certain conditions. Exempt supplies include goods and services that are considered essential in the healthcare and education industry. Zero-rated supplies on the other hand include goods and services that are exported outside the UAE including the supply of crude oil and natural gas

ENSURE VAT COMPLIANCE IN THE UAE

It is crucial for businesses operating in the UAE to ensure VAT compliance. It involves a robust procedure including correctly charging, collecting, and reporting VAT to the relevant tax authorities. VAT compliance is essential for any business in the UAE to avoid penalties. Businesses are expected to take advantage of the online compliance platform that has been made available to them by the authorities.

Repeated non-compliance may lead the authorities to revoke your VAT registration which in turn may lead to a severe impact on your business’s ability to operate in the UAE. In other extreme cases, legal proceedings can also be initiated by the concerned tax proceedings, leading to hefty fines, court proceedings, and sometimes even jail sentences.

To avoid the risks associated with non-compliance, it is important to ensure that every business has a dedicated VAT compliance team who will be responsible for meeting VAT obligations. Conducting regular VAT training and awareness sessions is also encouraged to avoid the peril of penalties. Various VAT compliance software tools are now also available to ensure a seamless process. Seeking assistance from an expert is also advisable.

ABOUT ARNIFI

Arnifi is digital first Corporate service provider helping companies enter the Middle East region, starting with UAE and Saudi Arabia markets. Founded and backed by professionals from Amazon, Souq and other large companies operating in KSA – the team understands what it takes to succeed as a startup in both UAE and Saudi Arabian markets, apart from going through the setup process multiple times. Arnifi will provide a truly digital experience to entry and scale up of companies both UAE and Saudi Arabia. The Arnifi promise is simple, yet revolutionary, use technology and a great team to provide transparency, efficiency and great customer experience in the whole process. Check out at – www.Arnifi.com for more details.