Registration as a VAT payer in the UAE

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VAT was introduced in the Emirates from January 1, 2018. The Federal Tax Authority obliged all companies, as well as individuals (if they meet requirements) to register as a VAT payer.

Mandatory registration as a VAT payer in the Emirates

Individuals and companies must calculate their taxable deliveries in the last 12 months, and if the cost of deliveries exceeds 375,000 dirhams (102,180 USD) over the past 12 months, then there is a duty to register as a VAT payer.

Voluntary registration as a VAT payer in the Emirates

If the value of taxable supplies for the past 12 months is less than 375,000 dirhams, but more than 187,500 dirhams (51,090 USD), the taxable person may decide to voluntarily register as a VAT payer.

Registration as Tax Group

If more than one company is managed by the same management, then these companies may decide to register for VAT purposes as the Tax Group. In this case, only one tax registration number will be allocated for the entire group of companies, and transactions within the group of companies will not be part of the total accounting. For the purpose of registering the Tax Group, the branch of the company will not be treated as a separate legal entity.

In which cases it is possible to cancel registration as a VAT payer in the Emirates?

If a business delivers only supplies that are taxed at a zero VAT rate and does not plan to make taxable supplies in the near future, then companies can apply for the cancellation of the tax registration.

VAT on goods and services

VAT is levied on goods, as well as services, and in order to account for VAT, the taxpayer must consider the taxable supply of goods and the taxable supply of services.

Calculation of taxable turnover

Taxable deliveries include deliveries with a standard VAT rate of 5%, supplies taxed at a zero VAT rate, supplies received using the reverse charging mechanism, imported goods (provided that the taxable person is deemed obliged to take VAT into account).

Taxable Expenses

You can register as a VAT payer in the Emirates if the VAT-related expenses exceed the threshold, even in the absence of taxable supplies. This allows the business to demand the return of VAT paid on expenses.

Administrative fines for the absence of tax registration

If the taxable person fails to file an application for the Tax Registration as a VAT payer in the Emirates within the time period established by law, an administrative fine of 20,000 dirhams (5,450 USD) is imposed.

It should be noted that one taxable person can have only one Tax Registration Number (TRN).