United Arab Emirates
VAT registration in UAE
A business must VAT registration in UAE, if the taxable supplies and imports exceed AED 375,000 per annum. This threshold is not applicable for foreign businesses. The voluntary registration threshold is AED 187,500. Businesses has to pays the VAT amount to the tax office. At the same time, it can receive a refund from the FTA. It has paid to its suppliers.
UAE VAT Compliance
To register for VAT in UAE, businesses must complete the require documents. Electronic VAT registration process will complete. Following documents are require 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?
- Exporting or importing information.
- Dealing with any custom department? If yes, then attach VAT Registration Letter.
- Are they doing business with any GCC country? (Country name).
- 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 Federal Tax Authority (FTA). The VAT returns summarises the value of the supplies and purchases. 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. Usually within 28 days of the end of the tax period as defined for each type of business. Tax period is a specific period of time which the tax payable will calculate. 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 assign a different tax period for certain type of businesses. Failure to file a tax return within the specified time frame. It will make the violator liable for fines. The provisions of Cabinet Resolution No. 40 of 2017 on Administrative Penalties for Violations of Tax Laws in the UAE.
Once you have VAT number in UAE. You have require to file your VAT returns by the 15th day following the end of each tax period. VAT amount must pay on FTA site.
You may choose your payment allocation option on the e-service portal. There are three options that define the priority of the liabilities to clear. When you make a payment. These are:
- Tax liability cleared first: payments will allocate towards the settlement of outstanding tax liabilities first (starting with the oldest). Thereafter to settling administrative penalties liabilities (starting with the oldest). This is the default option.
- Administrative penalties cleared first: payments will allocate towards the settlement of outstanding administrative penalties (starting with the oldest). Thereafter to settling tax liabilities (starting with the oldest).
- Oldest liability cleared first: liabilities will settle in chronological order. Starting with the oldest liability (irrespective of whether in relation to tax or penalties).
Import VAT refunds
When goods or services receive from outside UAE into UAE. The supply is call an import. Imports are taxable under VAT. When a person registered under VAT in UAE imports goods or services. The importer has to pay VAT on imports on reverse charge mechanism basis. This is in addition to customs duty levied on imports. Different conditions are divided based on the following:
- Import by an entity that is registered for VAT in UAE.
- Goods transhipped to a GCC country from the UAE.
- Import by an entity that is not registered under the UAE VAT regime
- Goods that are imported to the country and exported to another country
Eligibility for customs duty refund
Dubai Customs will allow a 1% customs duty refund on goods which fulfil all the following conditions:
- liable to 5% customs duty
- imported into the UAE through Dubai Customs
- upon payment of full customs duty
- import declarations processed between 15 March to 30 June 2020
- for resale locally within the UAE
Minimum refund threshold
Only refunds of AED 100 or more will be processed and disbursed.
Import declaration types
Eligible imports cleared under the following import declaration types will qualify for the refund:
- The import to local from Rest of the World
- It can local from Free Zone
- Import to local from Customs Warehouse
Deregister for VAT in UAE
UAE VAT deregistration will possible, when a business cancels its VAT registration with the Federal Tax Authority (FTA). Businesses and individuals who are registered under Federal Tax Authority (FTA) can de-register from VAT in two situations:
- If their turnover did not exceed AED 187,500 in the 12 months after registering with the FTA, they must apply for the VAT Deregistration.
- If the business stops making taxable supplies then they have to apply for VAT deregistration.
You can apply for Voluntary VAT registration on January 1, 2018 and after 12 months (on December 31, 2018) if the business has not made taxable supplies equals to AED 187,500, the business shall analyze and evaluate if it’s taxable supplies will exceed within the voluntary threshold (AED 187,500) in the next 30 days (ending January 30, 2019) then they can apply for VAT Deregistration in the next 20 days.