Expert VAT Assistance from Kabani & Company

At Kabani & Company, our team of UAE VAT experts is ready to assist you with the VAT registration process. We understand how important it is for your business. We'll help you register for VAT in the UAE in a simple and efficient way. Plus, we'll ensure that you meet all the FTA's requirements and stay on the right track. Just give us a call, and we'll be there to support you!

VAT Registration in the UAE

VAT registration in the UAE means that a company is officially recognized by the government as a seller of goods and services that can collect a tax called VAT from its customers. Only businesses with UAE VAT registration, both online number holders and registered companies, have certain privileges. They can charge VAT on their products and services, subtract the VAT they paid on their purchases from the VAT they collected, and then send the remaining VAT to the government. They also need to regularly share VAT returns and adjust their business records according to certain rules.

Understanding the basics of VAT is crucial before registering, as it's the first step for businesses to operate under the VAT system in the UAE. This process involves learning about how VAT works, and once registered, businesses can start following VAT regulations and adapting their financial records to meet these requirements.

VAT Registration Categories in the UAE

There is no need for all companies to register for VAT. VAT registration is only necessary for those companies that earn more than a certain amount of money each year. If a company earns less than this amount, they can choose to register for VAT if they want. There's also an option for some companies to get an exemption from VAT.

In the UAE, there are three main categories for VAT registration:
Mandatory VAT registration UAE
Companies in the UAE must register for VAT if they've supplied over 375,000 dirhams in member countries in the past year or expect to do so in the next 30 days.
Voluntary VAT Registration UAE
UAE businesses not required to register can still choose to if their annual supply or tax expenses are expected to be higher. The voluntary threshold is 187,500 dirhams, which is half of the mandatory VAT registration threshold.
VAT registration UAE exemption
Companies supplying less than 187,500 dirhams or dealing only in 0% taxed supplies can be exempt from VAT registration in the UAE.

VAT Registration Process in Dubai

To apply for VAT registration in Dubai, follow these two steps:
Create an Electronic Service Account
To apply for VAT registration in UAE, you need to create an electronic services account, which will be used for the VAT registration process. Then, you need to register online for VAT through the Federal Tax Authority (FTA). This is like making an account on websites like Gmail or Yahoo. Here's how you do it:

1. Open your web browser and go to this website: https://eservices.tax.gov.ae
2. Look at the upper right corner of the screen and click on the "Register" option.
3. Follow the steps to create your online account. It's similar to signing up for other websites. This account will be used for electronic services.
    

VAT Registration Process
Proceed to complete the VAT registration process by submitting the required information and documents for VAT registration. To apply for VAT registration, follow these steps using your e-service account:
Log in to your e-service account 
Log in to your e-service account using your login details. After logging in, you'll find the "Register for VAT" option on the dashboard.
Overview of VAT
When you click "Register for VAT," you'll be directed to a section called "Getting Started." This section provides guidance on the VAT registration process in the UAE.

The guide explains important details about the online registration process, including the information needed to fill out the VAT registration form. After reading the guide, confirm that you've understood it by checking the box that says, "Click here to confirm that you have read the Getting Started Guide," then click "Continue."
VAT Registration Form
Once you've confirmed, the VAT registration form will open. This form is divided into eight sections. You'll need to provide information in these sections to complete your VAT registration.

As you fill out the form, you can track your progress through color indicators. Sections that are in progress or need updating are shown in "brown," while completed sections are shown in "green" with a checkmark.
Registration Form Steps for VAT
The form has sections marked with a red asterisk (*), which means you must fill in all the required details. If you miss any, the website will remind you with a message showing which parts need more information.

• Applicant Information
• Contact Details
• Share your banking information as required.
• Business Relationship
• Declaration

VAT Group Registration

VAT Group Registration is a process in the UAE where two or more individuals or businesses working together in a business venture can apply for a single tax registration. This registration combines them into a single entity for tax purposes. However, specific conditions mentioned in the UAE VAT Act need to be met for this group registration to be valid. It's important to note that this type of registration is solely for tax-related matters.
Conditions for Applying for VAT Group Registration
Here are the conditions for applying for VAT group registration explained in simpler terms:

• Each business in the group needs to have a sales office in the UAE. This office can be where the company was legally established in the UAE or where important business decisions are made.
• If a person does business regularly and has the necessary resources, like staff and tools, to provide or get goods or services, that's called a fixed establishment. This also includes branches.
• The people involved in the group should have a connection at the economic, financial, or regulatory level. This means they can't be completely separate entities. One might have control over the other, either through legal means or by owning shares or having voting power.
• One or more businesses in the group need to be in control of the others. This could be seen if the managers, directors, or partners of one business also have control over another business in the group.
• VAT Group Registration Map
• VAT Group Registration

VAT Registration for Foreign Corporations  
If you are a company from outside the UAE and you sell products in the UAE to local customers who aren't registered for VAT, you need to register for VAT, regardless of your sales turnover.

Before you start selling on Amazon in the UAE, foreign companies must complete VAT registration and get a VAT number. VAT registration is mandatory for international businesses selling on Amazon in the UAE.
VAT Registration for E-commerce Sellers 
As more businesses use digital platforms to sell their products, UAE companies selling online need to apply a 5% VAT on local sales as per FTA rules. However, exports will have a 0% UAE Tax. It's important for businesses to keep records of export transactions.
Determining Tax Registration Threshold
As per Federal Decree-Law No. (18) of 2022 on Value Added Tax, the following factors are assessed to decide if someone has crossed the Mandatory or Voluntary Registration Thresholds:

• The worth of taxable goods and services.
• The value of particular goods and services.
• The value of supplies that a person inherits when buying a business from someone else.
• The value of taxable supplies from related parties, following VAT Executive Regulation conditions.

Advantages of VAT Registration
As stated by professionals, introducing VAT in the UAE brings lasting benefits to the economy and business proprietors. VAT registration in Dubai holds significant importance for various reasons:
VAT registration boosts a company's reputation.
Registration prevents unnecessary fines.
It allows claiming VAT refunds.
Registration opens up wider market prospects.

VAT Return Filing

A VAT Return is an official document filled out by the taxable person and submitted to the Federal Tax Authority (FTA) regularly. The document has details about the unpaid and recoverable VAT. You need to put in all the important details. You have to send it online using the FTA website. You can fill it out yourself (a Taxable Person) or someone else who is allowed, like a tax agent or a legal representative. 
Taxation period
The taxable period is a specific time when the tax payment is calculated and paid. Usually, the standard taxable period is three months long and ends on a set date by the FTA. Sometimes, the FTA might give different time periods to specific groups of taxpayers. For example, some companies might need to file VAT every month in Dubai.

If you're given the standard three-month period, you can ask the FTA if it's possible to end the period in a different month. They might agree, but it's up to them. 

You need to send your VAT return to the FTA within 28 days after the taxable period ends. Sometimes, they might tell you to send it on a different date. If you have to pay taxes, the money also needs to reach the FTA by the same deadline. It's important to understand tax obligations.

Key Terms Impacting VAT Operation and Tax Liability
Input Tax
From the perspective of the person buying goods or services, "temporary sales tax" refers to the additional cost, known as VAT, that the seller includes in the price. If the beneficiary is a registered VAT user, you might have the chance to reclaim this VAT from the tax authority (FTA), but certain conditions apply:
Firstly, you need to have a document, like an invoice, that proves the VAT amount charged. Additionally, you must have either paid the VAT amount already or have a plan to pay it (in cases where the payment is due later). Once you've confirmed that you're eligible to reclaim the VAT, you can include this particular amount in your VAT return as a deduction.
Output Tax

"Output Tax" is the VAT that an eligible person registered for VAT calculates and includes when they sell goods or services. This is usually calculated for sales to other people. Sometimes, you might have to charge VAT even in cases where it seems like you're not supposed to. This could be due to specific rules or situations.

You have to keep track of this VAT starting from when you actually sell something, which is known as the "supply" date. When that date comes, the taxable person will be required to put this VAT in the VAT return for that time period.  
Calculating Tax Obligations
For someone registered with VAT, their tax obligation is calculated by finding the difference between the temporary sales tax they've paid in a certain period and the temporary sales tax they can collect during the same time. If the tax you've paid is more than what you've collected, you'll need to pay the difference to the FTA. On the other hand, if the VAT you've collected is more than what you've paid, you can get a refund of that VAT from the FTA. 
Submission of VAT return
Every time a certain time passes, taxable person or businesses are required to submit a VAT return. This report includes information about the things they sold or bought.

If you operate as a retailer and offer tax refunds to tourists from the UAE through the official tourist refund system, you should include the tax refunds given to tourists as part of this system. Record any supplies of goods and services that are subject to a zero VAT rate.

If applicable, provide information about adjustments related to goods imported into the UAE and declared through UAE Customs. Include supplies of goods and services received by your business that fall under the reverse billing provisions. Detail the supplies of goods and services that are subject to the standard VAT rate specific to each emirate. List any supplies that are exempt from VAT. Document supplies of goods and services that are subject to a zero VAT rate.

VAT De-Registration

VAT deregistration is a way for businesses that are currently registered for VAT (Value Added Tax) to cancel their registration. This process involves canceling their VAT number and the official recognition of being a VAT-paying business. The government tax authority can initiate this cancellation if a business asks for it or if the business meets certain conditions for de-registration.
When Can I Apply for VAT Deregistration in the UAE?
If you're registered for VAT, you can ask to cancel your VAT registration in two cases:

• If the person has stopped selling items or services that have VAT and doesn't plan to sell them for the next year.
• If the individual’s total sales or expenses subject to VAT are lower than AED 187,500 over 12 months in a row and are not expected to go over this amount in the next month.

When can an FTA in the UAE be deregistered?

• The FTA in the UAE can cancel a person's registration if that person meets either of the two conditions we talked about earlier. This is known as compulsory tax deregistration.
• If the individual's taxable objects or taxable expenses remain below the self-registration threshold (AED 187,500) for a continuous period of 12 months and are not anticipated to surpass this threshold within the subsequent 30 days.