Value Added Tax (VAT) came into action in the UAE on 1 January 2018. The VAT rate is 5 percent. VAT can provide the UAE with a new stream of revenue that can continue to be used to deliver high-quality public services. This would also help the government push toward reducing dependence on oil and other hydrocarbons as a source of revenue.
1. When its taxable sales and imports surpass AED 375,000 per annum, a company must file for VAT.
2. It is optional for companies whose exports and imports surpass AED 187,500 per year.
Taxable undertakings must periodically file VAT returns with FTA and typically within 28 days of the end of the 'tax period' as specified for each form of business. A 'tax period' is a fixed period over which the tax due is measured and paid. The standard fiscal period is given below. For companies with annual turnover below AED 150 million per quarter and monthly for businesses with a yearly turnover of AED 150 million or more. The FTA may allocate a different tax period for certain types of businesses at its choice. If a person fails to file his/her tax returns within the prescribed period, the infringer will be liable for fines according to Cabinet Resolution No. 40 of 2017 on Administrative fines for Violating Tax Laws.
Steps for VAT Registration in Abu Dhabi
Here are some of the steps involved in the VAT registration process.
Step 1: Getting Ready
You need to have some documents and information in handy before you can register for VAT. Below is a non-exhaustive checklist of the documentation you may need. The specific list is decided according to the company's legal status and business activities.
- Trade license for companies
- Certificate of incorporation
- Bank account details
- Authorized signatory identity documents ( e.g. passport copy, Emirates ID, etc.)
- Description of the commercial activities
- Last 12 months figures for turnover
- Predicted future turnover sales
- Estimated import and export values
Keep in mind that just soft copies of the documents are required. During the registration process, you will be asked to upload these.
Step 2: Create a Login Account
- Open FTA website and click on Create new User Account
- Fill the application form and check your email for a verification email
- After you verify you with your mail, you will get access to your account.
Step 3: Registration of Your Business
Login to your account and navigate to the VAT registration form. The registration process includes several navigable pages. You can switch between them, back and forth. You can save your application as a "draft" at any point, and then restart the registration process.
Step 4: Return the Application Form and Submit the TRN
Submit your application after you have entered all the necessary details on your application form and are pleased with the accuracy of the information you submitted. The FTA will evaluate your application, and you will receive a confirmation by email, along with your TRN, if everything is Well. You will also obtain a tax registration certificate, which is available for download from the portal.
What Should You Do Next?
Once you complete your registration process for VAT, you will have to comply with VAT rules, regulations, and procedures. Here are the significant procedures you will have to comply with.
- Update Your Invoices
- Coordinate With Your Suppliers
- Maintain Proper Records
VAT Categories in Abu Dhabi
Foreign businesses may also recover the VAT they incur when visiting the UAE. The value-added tax
is categorized as given below.
The standard rate is a supply on which tax is charged at 5 percent and deductible from the related input tax. All supplies other than those goods/services not listed in Exempted & Zero Rated below are taxable at a standard rate.
An excluded supply is a service on which tax is not paid, and the associated input tax can not be deducted. The categories of supplies mentioned below will be exempt from VAT.
- Bare land
- Local passenger transport
- Residential properties
- The supply of some financial services
A zero-rated supply is a taxable supply on which tax is charged at 0 percent and deductible from the related input tax. VAT is charged at zero percent for the following big supply categories.
- Exports of goods to outside the GCC
- Global transportation and associated supplies
- Supplies of specific modes of transportation (such as aircraft and ships)
- Other precious metal investments (e.g., gold, silver, 99% purity)
- Recently constructed residential properties, which are for the first time supplied within three years of their construction
- provision of other educational services and the delivery of the related goods and services
- provision of certain healthcare services and the provision of goods and services concerned
Commitbiz is one of the top-rated consultancy firms with 360 degrees of divergent services throughout the UAE. Our experts at Commitbiz can provide all of the above VAT services on the basis of either a comprehensive VAT package or a particular service unit. We recognize that the situation of each client is different, and we have the flexibility to adapt our services to the requirements of a specific client. Our goal is always to combine the highest standard of professional service with the most straightforward approach to get a full and clear understanding of their tax-related obligations within the UAE. We are not limiting ourselves to VAT services; instead, we provide all kinds of services required for setting up a business in Abu Dhabi. To get some expert advice, please contact us today. We are waiting to help you.