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Assistance with VAT Registration UAE
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VAT Registration in UAE
According to Federal Decree-Law No. (8) of 2017, the United Arab Emirates (UAE) has implemented Value Added Tax (VAT) since January 1st, 2017. VAT is applicable to all goods and services at a standard rate of 5%, which is comparatively low compared to other countries that have adopted it.
Businesses with an annual turnover exceeding AED 375,000 are required to register with the Federal Tax Authority. Additionally, businesses with a turnover surpassing AED 187,500 have the option to voluntarily register with the FTA.
Required Documents for VAT Registration
To register for VAT in the UAE, you can complete the process through the Federal Tax Authority (FTA) website. Once registered, you will receive a unique tax registration number (TRN) that you’ll use to file tax returns and request refunds, if applicable.
Businesses with an annual turnover of at least AED 375,000 are required to register for VAT in the UAE. It’s important to maintain accurate business records at all times to fulfill government requirements and assess tax liability. Additionally, VAT paid on business-related goods or services can be reclaimed.
For VAT registration, companies are required to submit the following documents:
- Trade License
- Certificate of incorporation or registration certificate
- Article of association/ partnership agreement or any other document showing ownership information about the business
- Copy of Passport and Emirates ID of the manager
- Profile of the manager
- Physical office location of the business
- Contact details
- Bank account details
- List of other business directories/partners in the UAE in the last five years along with trade license copies
Declaration about:
- Business Activities of the applicant
- Actual or estimated financial transaction values
- Turnover in the last 12 months with supporting documents
- Details about expected turnover in the next 30 days
- Details about expected exempt supplies
- Details about Imports and exports
- GCC activities of the business
- Details about customs registration
Registering for VAT can be a somewhat intricate and time-consuming procedure. It’s important to have all your personal and business identification documents, along with scanned copies, readily available before you embark on the registration process.
Need help with VAT Registration or VAT Return Filing? Reach out to our VAT Consultants for assistance.
VAT Registration Zones
VAT Registration For Freezone Companies In UAE
Freezones in the UAE exist outside the territorial scope, except when it comes to VAT. Only the Free Zones listed in a Cabinet Decision qualify for special VAT treatment, which comes with certain limitations.
These designated Free Zones, known as Designated Zones for VAT purposes, have an impact on businesses operating within them. Many goods supplied within Designated Zones fall outside the scope of UAE VAT, provided they meet specific criteria and maintain detailed records. However, supplies of services follow the normal UAE VAT rules.
Identification Of A Designated Zones
Several criteria must be met for a Designated Zone to be treated as outside the UAE for VAT purposes.
- The Designated Zone must be a specific geographic area with in a fence
- The designate zone must have security measures and Customs controls in place to monitor the entry and exit of individuals and the movement of goods to and from the designated zones.
- The Designated zone must have internal procedures regarding the method of keeping, storing and processing of goods within the free zone.
- The operator of the Designated Zone must comply with procedures set out by the FTA.
VAT Registration for Offshore in UAE
There is some confusion surrounding whether the International Business Companies (IBC), commonly referred to as Offshore Companies in UAE, fall under the jurisdiction of VAT law in the country. In the UAE, there are three offshore jurisdictions namely Ajman Offshore, RAKICC, and JAFZA Offshore.
As the term implies, “Offshore companies” are considered legally outside of the country. These companies are non-resident entities and are not eligible to conduct any business within the country where they are incorporated. Offshore companies are not allowed to establish their own office; instead, the company address is taken care of by the Registered Agent office. Additionally, Offshore companies cannot register with the Chamber of Commerce nor obtain an Import Export Code.
Since Offshore companies are non-resident entities and do not engage in business activities within the UAE, they are not subject to VAT. It is important to note that VAT is only applicable to the fees charged by the Registered Agent for the incorporation and annual maintenance of the company.
At Pravo, we have a team of expert VAT Consultants who possess comprehensive knowledge of the VAT Law and Legislation published by the UAE Government. We are dedicated to assisting our clients by providing accurate and reliable VAT Consultancy services, helping them register for VAT, and obtain a unique Tax Registration Number (TRN). Businesses are required to file VAT returns every 3 months, and Pravo is here to guide and support our clients in preparing Tax Invoices and filing returns.
VAT De-Registration in UAE
The termination of Value Added Tax (VAT) or VAT deregistration in the United Arab Emirates (UAE) refers to the process of a business ending its VAT registration with the Federal Tax Authority (FTA). There are several reasons why a business may opt to terminate VAT or close its VAT transactions.
Businesses operating in the UAE are required to cancel their VAT registration in adherence to the guidelines outlined by the VAT laws of the UAE. It is important to ensure that the reasons provided for cancellation comply with the specified conditions; otherwise, the cancellation may be considered invalid and could result in fines for failure to pay VAT.
Companies in the UAE can request VAT de-registration through the Federal Tax Authority (FTA) Online Platform. However, it is crucial to understand the necessary steps and requirements outlined in the VAT Decree-Law when applying for VAT de-registration.
When to Apply for VAT De-Registration UAE
- If Annual turnover of the Company has not exceeded AED 187,500 in the 12 months after registering with the FTA
- If a business stops making taxable supplies
- If the companies expenses are below the VAT registration threshold of AED 375,000
- 12 months have elapsed since the date of voluntary VAT Registration
- Upon Liquidation/ De-registration of a Company
The Company needs to submit the VAT De-Registration application form within 20 working days from the date of any of the aforementioned events. However, for Voluntary VAT is no specific time limit to apply for VAT De-Registration. Delaying the application for VAT de-registration may result in fines imposed by the FTA.
List of Documents Needed to Submit VAT De-Registration Application Form
- Company liquidation letter from authorities if the company is closed.
- Audited Financial statement (Signed & Stamped) for the last 12 months stating the taxable supplies are less than the threshold.
VAT De-Registration Approval Clearances in the UAE
Business entities in the UAE must ensure they obtain clearance from the Federal Tax Authority by settling all outstanding taxes, VAT returns, and administrative penalties. Just as registering for VAT is crucial, so too is VAT de-registration for businesses. It is imperative for businesses to understand the regulations and procedures involved in the VAT cancellation process in the UAE, including the potential administrative penalties that may arise from delays in de-registration.