Value added tax (VAT)
Value Added Tax (VAT) is a tax levied on each level of value added of a product throughout the supply chain. It is collected at each point of sale of the manufacturer until it is sold to the end consumer. This is done by allowing the adjustment of tax paid on purchases, also known as “temporary sales tax credits” or “temporary sales tax”, while VAT on sales is referred to as “sales tax”. temporary sale ”. Is called. Ultimately, all taxes are paid by the consumer.
The United Arab Emirates imposes a standard tax rate of 5% on the supply of goods and services. However, some supplies such as local passenger transportation, designated financial services, medical care, and exports outside of the Gulf Cooperation Council will be zeroed by the UAE or exempt from VAT.
UAE VAT Registration
Overview of VAT registration in United Arab Emirates
UAE registered for VAT under the VAT law means the business is recognized by the government as a supplier of goods and services and is authorized to collect VAT from customers and send it. to the government. Only holders of an online number registered by UAEVAT and registered companies can perform the following operations:
- VAT will be charged for the supply of taxable goods and services
- The input tax credit on purchase will be deducted from the input tax credit deducted from VAT on sales.
- Pay VAT to the government
- Submit your VAT returns regularly
In addition to the above, all UAE VAT registered online number holders and registered companies adjust their business reporting structure based on compliance requirements such as accurate and up-to-date books, tax documents (receipts, credit notes, debit notes, etc.) must do this. . , All internal procurement records, and the need to maintain external procurement, etc.
Therefore, understanding the basic knowledge of VAT is one of the important steps in preparing for VAT registration, and obtaining VAT registration is the first step for a business to move on. in the age of VAT. This will be the stage of.
Who must register for UAE VAT
Are all companies responsible for VAT registration? No, VAT only applies to companies that exceed the prescribed total annual turnover threshold. Depending on the registration threshold, the business is allowed to register VAT. Alternatively, the business can apply for registration or request registration for VAT exemption.
On this basis, UAE registered for VAT can be divided into the following categories:
- Dubai VAT registration required
- Voluntary UAE VAT registration
- VAT registration United Arab Emirates exemption
Registration for UAE VAT
All businesses that are resident in the United Arab Emirates and have supplied more than 375,000 dirhams to member countries in the past 12 months must register with UAE VAT. Additionally, businesses must register for UAE VAT online if they expect their total supply to exceed the required VAT threshold of AED 375,000 within the next 30 days.
Mandatory registration for UAE VAT
In the past 12 months, the residential value of consumables has exceeded AED 375,000. It is expected to exceed 30 days this year. Types of business registration threshold conditions – Non-resident thresholds do not apply. Regardless of the threshold, VAT online VAT registration in UAE requires VAT registration
Voluntary UAE VAT registration
All UAE resident businesses that do not need a mandatory UAE VAT registration can choose to voluntarily apply for UAE VAT registration online. Can this be higher than the voluntary VAT registration threshold only if the annual delivery or the tax burden is higher? The online threshold for voluntary VAT registration in the United Arab Emirates is 187,500 dirhams, which is 50% of the mandatory United Arab Emirates VAT registration threshold.
Voluntary UAE VAT registration
Consumables / taxable costs have exceeded AED 187,500 in the past 12 months Expected to exceed 30 days this year
UAE VAT registration is not required here. For businesses, the decision to register is optional. Including taxable fees as an eligibility criterion for self-registration gives all start-ups the opportunity to register for VAT. This is because sales and procurement as a start-up may decrease, but it is likely that a significant amount of taxable expenses will be incurred when starting or starting the business. As a result, using tax rates as the basis for voluntary UAE VAT registration will allow all start-ups to register with zero sales.
VAT exemption registration
Businesses with deliveries from Member States below the self-registration threshold of AED 187,500 cannot be registered for VAT in the UAE. In addition, businesses that only engage in zero-rated deliveries can apply for an exemption from VAT registration.
How to apply for VAT registration in the United Arab Emirates
There are two steps to apply for VAT registration in Dubai. You need to create an electronic service account first and then complete the VAT registration process.
- Create an electronic service account
- VAT registration procedure
- Create an electronic service account
Online VAT Registration Before you travel to UAE, you need to use an FTA to create an electronic service account. Setting up an online account in an FTA is very similar to setting up other online accounts (Gmail, Yahoo, etc.). To create an account, you need to go to https://eservices.tax.gov.ae and click on the “Register” option in the upper right corner of the screen. To create an eservices account:
- United Arab Emirates VAT registration process
To apply for VAT registration, you must log into your e-service account using your login details. The details on how to apply for VAT registration in UAE are as follows.
1.Log in to your e-service account
When you log into your e-service account, you will see the option “Register for VAT” as shown below.
Logging in to the electronic service account
VAT Registration To start the UAE process, click Register for VAT on the dashboard as shown in the image above.
By clicking on “Register for VAT”, you will access “Getting started”, as shown below.
Guide to acquiring VAT
This guide will help you understand some important aspects of UAE online registration in the Bat process. It also provides detailed information about the information required to complete the UAE VAT registration online form. After reading the detailed information on the different parts of the guide, you should check “Click here to confirm that you have read the Getting Started Guide” and click “Continue”.
3.VAT registration form
After reading the guide and clicking Continue, the VAT registration form will open as follows:
VAT registration form
The UAE VAT registration online form has eight sections, and you need to enter more information in these sections to complete your VAT registration. Applicants can follow the progress of their VAT registration using various colored indicators. As shown below, parts in progress or parts whose details are updated are displayed in “brown” and finished parts are displayed in “green” with a check mark.
Steps of the VAT registration form
The portal will only allow you to go to the next section if the detailed information (indicated by a red asterisk (*)) is entered in all mandatory fields. If one or more mandatory fields are not entered, the portal is designed to remind you with a message indicating the relevant fields for which detailed information needs to be entered.
Let’s discuss the details to be entered in the different sections of the UAE online VAT registration form.
About the applicant
information on applicants
What is VAT group registration?
UAE VAT registration allows two or more persons engaged in a business activity to apply for tax registration as a tax group. A tax group is a group of two or more persons registered as a single taxable person in a free trade area, but who must meet the conditions stipulated by the UAEVAT law. This group registration is for tax purposes only.
Conditions for applying for registration of the VAT group
To meet the requirements of the VAT group registration application, all of the following conditions must be met:
- Everyone must have a fixed sales office or sales office in this state:
This means that everyone must have one of the following sales offices in UAE:
Place of establishment: the place where the company has been legally established in accordance with the establishment decision in the United Arab Emirates, or where major administrative decisions are made and central management functions are performed
Fixed establishments: Fixed establishments other than those in which a natural person carries out his activities on a regular or permanent basis and has sufficient human and technical resources to provide or acquire goods or services. This includes branches and is considered a fixed institution.
- The parties involved are related parties.
Related parties here mean two or more people who are not economically, financially or regulatory apart. One of them can control the other by law or by purchasing shares or voting rights.
- One or more people in the partnership control the other.
This means that one or more parties control another business. For example, senior executives or company directors of each other, or business partners of each other.
VAT group registration card
VAT group registration
VAT group registration fee
Here are the advantages of VAT group registration for companies
- All entities within a VAT group are considered as “one” and only one entity with tax identification number (TRN). This simplifies VAT accounting and requires compliance reports (like VAT returns) to be created and reported at the group level (rather than the entity level).
- All deliveries within the VAT group entity are excluded from the scope of VAT. This means that deliveries between VAT groups are not subject to VAT. However, VAT is levied on products supplied by the TVA Group to entities outside the TVA Group.