From 1st January 2018, Value Added Tax (VAT), which is an indirect tax system, has come into effect in the UAE and Saudi Arabia. Bahrain and Oman have also implemented VAT since then. Rest members of the Gulf Cooperation Council (GCC) i.e. Qatar and Kuwait have not implemented it yet but are expected to implement it soon.
In this VAT system of the UAE, in most of the goods and services, VAT is charged @ 5% of the value. VAT is charged at every stage of the supply chain and tax paid on earlier stage is allowed as credit at the time of payment of tax. There are a few goods and services on which 0% VAT is charged, and a few are wholly exempted from the charge of VAT. While some members of GCC, namely Saudi Arabia and Bahrain have increased rate of VAT to 15% and 10% respectively from 5% as agreed by GCC initially, UAE has so far not increased the rate.
Registration depends on several factors such as products manufactured and/or sold by company, services provided by company, turnover of taxable supplies made by company and amount of imports by company.
Mandatory Registration: If the company’s taxable supplies and imports are more than AED 375,000/- in last 12 months period, or is expected to exceed in the next 30 days, then VAT registration becomes mandatory.
Voluntary Registration: In case the company’s taxable supplies and imports or taxable expenses, incurred in any past period of 12 months or less exceeded, or is expected to exceed in the next 30 days, threshold of AED 187,5000/-, then it is optional for the business to register it under the UAE VAT Law.
So, if taxable supplies and imports of company are less than AED 187,500/-, the company requires no registration under this law.
In case if company is required to obtain registration, but do not obtain the same within time limits, a penalty of AED 20,000 is levied. To avoid this penalty, it is important to track entity’s transactions and apply for registration as soon as requirement arises.
We can help in seamless registration of your business with Federal tax authority of UAE by:
Understanding your business and determine if you are required to get registered under VAT.
Helping with arrangement of all relevant documents. Click here for list of documents required for VAT registration
Making application with FTA for registration on their portal.
Meeting FTA officers and providing necessary information to FTA in case required.
Help in making application for amendment, deregistration, clearance certificate, VAT refunds etc.