Check if you are obliged to pay VAT


The first month of validity of VAT in the UAE is coming to the end. So the tax authorities can see some results of the number of registrated companies.

In the United Arab Emirates, many companies still have not sent documents to the Federal Tax Service. About 260 thousand companies registered as VAT payers, but several thousands of others have not done it yet.

On Tuesday, Khalid Al Bustani, head of the Federal Tax Service, urged businessmen to bring their affairs in order.

He explained that the authorities are not going to punish the company, noting that there was no date for issuing fines yet.

Last week, authorities reported that legal entities will be given several months to file their first tax returns. This step will help companies not to feel discomfort connected with new regulations.

Online registration as a VAT payer was started in September 2017.

In the year 2017 there were 350,000 companies required to register as VAT payers.

The official noted, that in some countries, this process usually is going for 4-8 months. But it it expected that registration will be completed in the near future in the UAE.

Asked about the 20,000 dirhams penalty provided by law, Mr. Al Bustani answered: “Our goal is not to fine companies, but to ensure registration of all taxpayers. However, companies that deliberately avoid registration will undoubtedly be fined. ”

He also marked, that in other countries where VAT is available, the tax authority plays only the role of an observer, but in the UAE many companies expect FTS to act as a tax consultant.

Mr. Al Bustani emphasizes flexibility of authorities and guesses a number of enterprises might not be ready for change. However, he stressed that there are no indulgences for those who deliberately hide from paying taxes.

But we remind that not only companies pay VAT.

Many individuals are obliged to pay VAT.

We give a brief info on how to register as a taxpayer.

According to experts, there is nothing complicated in this. We offer you an algorithm that you need to follow to register as a taxpayer:

1. Check if you are required to pay VAT

Freelancers are divided into three baskets depending on profit:

– Individuals earning more than 375,000 dirhams a year are required to pay tax.

– Individuals with a profit of 187,500 to 375,000 dirhams, who can choose, pay, or not pay VAT.

– Freelancers earning less than 187,500 dirhams, who can not register using the above algorithm.

To register an individual taxpayer number (TRN), a freelancer must earn at least 187,500 dirhams over the past 12 months. The law states that this amount must be earned in the last 12 months, or within the next 30 days.

2. Obtain a license

This step is necessary for those freelancers who do not have a license yet. Many free zones on the territory of the United Arab Emirates offer licenses for freelancers.

3. Register online

Once a freelancer receives a license, he can begin the process of registering as a VAT taxpayer, which is fully carried out online at the FTS portal. Be prepared to provide a copy of your passport and ID of a UAE citizen. After a period of time, the state body will confirm your registration and provide the taxpayer’s number.

4. Carefully conduct your business.

5. Fill in the tax return in time.

The tax return must be submitted every quarter. When filling in the accounting documents, be sure to take into account all the necessary data, otherwise you can be fined.