United Arab Emirates
VAT registration in United Arab Emirates
A business must VAT registration in United Arab Emirates if its taxable supplies and imports exceed AED 375,000 per annum. This threshold is not applicable to foreign businesses. The voluntary registration threshold is AED 187,500. A business house pays the government, the tax that it collects from its customers. At the same time, it receives a refund from the government on tax that it has paid to its suppliers.
Documents required for VAT registration
To register for VAT in UAE, businesses must complete the required documents. The process for VAT registration and fee submission will require. Following documents are required for VAT registration in UAE.
- Copy of Trade License (should not be expired).
- Passport copy of the owner/partners who owns the license.
- Memorandum of Association (MOA) (not necessary for sole establishments).
- Contact Details of company
- Concerned person contact details (Mobile Number, E-mail).
- Bank Details
- Owner has any other entities?
- Are they exporting or importing?
- Are they dealing with any custom department? If yes, then attach VAT Registration Letter.
- Are they doing business with any GCC country? (Country name).
- If they are representing more than one entity, whether they want one tax group number for all the entities or separate tax numbers for each.
At the end of each tax period, VAT registered businesses or the ‘taxable persons must submit a VAT return to United Arab Emirates Federal Tax Authority (FTA). A VAT return summarises the value of the supplies and purchases a taxable person has made during the tax period and shows the taxable person’s VAT liability.
Taxable businesses must file VAT returns with FTA on a regular basis and usually within 28 days of the end of the ‘tax period’ as defined for each type of business. A ‘tax period’ is a specific period of time for which the payable tax shall be calculated and paid. The standard tax period is:
- quarterly for businesses with an annual turnover below AED150 million
- monthly for businesses with an annual turnover of AED150 million or more.
The FTA may, at its choice, assign a different tax period for certain type of businesses. Failure to file a tax return within the specified time frame will make the violator liable for fines as per the provisions of Cabinet Resolution No. 40 of 2017 on Administrative Penalties for Violations of Tax Laws in the UAE.
Once you have registered for United Arab Emirates excise tax, you are required to file your excise tax return by the 15th day following the end of each tax period. VAT and excise tax registered businesses must pay their tax dues electronically.
You may choose your payment allocation option on the e-service portal. There are three options that define the priority of the liabilities to be cleared when you make a payment. These are:
- Tax Liability Cleared First: Payments will be allocated towards the settlement of outstanding Tax liabilities first (starting with the oldest), and thereafter to settling Administrative Penalties Liabilities (starting with the oldest). This is the default option.
- Administrative Penalties Cleared First: Payments will be allocated towards the settlement of outstanding Administrative Penalties (starting with the oldest), and thereafter to settling Tax liabilities (starting with the oldest).
- Oldest Liability Cleared First: Liabilities will be settled in chronological order, starting with the oldest liability (irrespective of whether in relation to tax or penalties).
Deregister for VAT in UAE
The UAE, deregistration of VAT is when a business cancels its VAT registration with the Federal Tax Authority (FTA). There could be various reasons, why a previously taxed business or an individual can opt for cancelling their registration for VAT in UAE. Such reasons are needed to fall under the conditions defined by the Law related to VAT. Unless the reasons are valid and the conditions are fulfilled, the FTA might disapprove the application to deregistration.