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From January 1, 2018, value-added tax (VAT) would come into effect in the UAE. This would apply at the rate of 5% to non-essential consumer goods. Businesses can start registering for VAT three months before this date, that is, from October 1, 2017. The regulatory body for VAT in the UAE is the Federal Tax Authority (FTA).
Here's all you need to know about how to register your company for VAT.
Am I eligible for VAT?
All businesses operating in the UAE providing goods or services falling in the taxable categories with a yearly revenue exceeding AED 375,000 are required to register for VAT. For companies with the value of yearly supplies and imports below AED 375,000 but above AED 187,500, such a registration is optional and voluntary.
What are my VAT-related responsibilities?
All businesses in the UAE must record all their financial transactions, and make sure their ledgers are transparent and updated. Businesses eligible for VAT are required to register for it.
VAT-registered businesses must:
- Charge the appropriate amount of VAT on their taxable goods/services
- Maintain business records to enable the government or auditor to check if things are in order
- Report the VAT charged, and the VAT paid to the government, on a regular basis
Tax Registration Number
Under the UAE VAT, it is mandatory for every business to describe a tax registration number (TRN) in order to claim credits of taxes paid. The said TRN can be communicated by a business to its suppliers, vendors, and customers – so that when they raise an invoice, it is tagged with a TRN – allowing businesses to claim credits.
Businesses that registered before 4th December 2017 got their TRN. To help achieve tax compliance ahead of VAT implementation on 1st January 2018, the FTA started to issue provisional TRNs to businesses that commenced registration after the 4th December deadline – so that there is no interruption in business.
If you have been given provisional approval for VAT registration (as can be checked on one’s email communication), then you will not be able to access your VAT registration certificate at the moment. It will be available at a later date, once the review and verification of your registration details are completed by the FTA. You will receive a communication once your VAT registration certificate is available to you.
TRN is a prerequisite to VAT implementation in the UAE, and hence the issuance of provisional TRNs would go a long way in ensuring continuity of business.
What is the deadline for registering for VAT?
Businesses with an annual turnover of over AED 150 million are urged by the authority to register for VAT before October 31, 2017, and those with an annual turnover of over AED 10 million are advised to register before November 30, 2017. In any case, all businesses eligible for VAT should be registered by January 1, 2018, and should submit their registration applications prior to December 4, 2017 – to avoid the risk of not being registered in time.
How to register for VAT?
Companies can register on the online portal of the FTA. Businesses are required to set up an online account on the site and fill up the VAT registration form. For a detailed guide on how to go about VAT registration, you can go through this guide published by the FTA.
Seeing as VAT would come into effect in the UAE from 1 January 2018, businesses operating there would need to carry out their VAT implementation plans. This includes systems for VAT filing or reclaiming, as may be applicable. This would have nominal to considerable impact on top lines and balance sheets, thus requiring companies to plan out appropriate financial, technical, compliance and training systems in order to be in accordance with the new regime.
We at Commitbiz have our team of experts to help you with company formation, registration, and counseling. For any queries on VAT or tax consultation for companies in the UAE, do contact us, even if it's just for a friendly advice.