VAT – Value Added Tax Registration in UAE Compulsory or Optional

If you are a new company registered in UAE or an existing company, now this is the time to access whether you have to take VAT registration for your business or no. As VAT is now introduced in UAE from 01st January 2018, Federal Tax Authority argues all business and individuals to access applicability of VAT on their business and apply for VAT registration accordingly.

Following are the important points about VAT registration in UAE: Mandatory VAT registration:

Individuals and Business have to access their taxable supplies in last 12 months if the supplies are more than AED 375,000 in last 12 months then it is mandatory to apply for VAT registration.

Voluntary VAT registration:

If taxable supplies are less than AED 375,000 but more than AED 187,500, taxable person may opt for voluntary VAT registration.

Group VAT registration:

For smooth inter company business transaction FTA introduced group VAT registration, if there is more than one company held by the same management then they can opt for group VAT registration. In that case only one tax registration no. will be allotted to all group companies and transactions within group companies will be outside the scope. For group vat registration purpose branch of a company will not be considered as separate legal entity.

Exemption from VAT registration:

if business is supplying only zero rated supplies and not planning to supply taxable supplies in near future, in that case businesses can apply for exemption from VAT registration.

VAT on Goods & Services:

VAT is applicable to goods as well as services, in order to access applicability one should consider both i.e. supply of taxable goods and services.

Calculation of taxable turnover :

Taxable supplies includes – standard rated (5%) supplies, Zero rated supplies, reverse charged services received & imported goods (provided the taxable person is responsible for accounting for the tax).

Taxable expenses:

it is also allowed to apply for VAT registration if expenses subject to VAT are more than threshold limit even if there are no taxable supplies. This allows business to claim VAT paid on expenses.

Physical presence:

Presence of authorized signatory is not required for VAT registration.

One TRN policy:

one taxable person can have only one Tax registration number, it is not allowed to hold multiple TRN by on taxable person.

Input tax credit for pre VAT registration period:

A Registrant may recover Recoverable Tax incurred before Tax Registration (with some exceptions) on the Tax Return submitted for the first Tax Period following Tax Registration, which has been paid for any of the following:

a. Supply of Goods and Services made to him prior to the date of Tax Registration. b. Import of Goods by him prior to the date of Tax Registration. Administrative penalties for Non VAT registration:

If a taxable person fails to submit VAT registration application with in time frame specified in VAT law an administrative penalty of AED 20,000 will be imposed.

Flying Colour Tax Consultants competent team could assist you in: 1. VAT Compliance and Registration. 2. VAT Implementation & Changes in current accounting system as per VAT Law. 3. Timely and Correct Submission of VAT Tax Return (Form VAT201). 4. Timely and Correct Submission of VAT Tax Refunds (Form VAT311). 5. Preparation of FTA compliant Books of Accounts. 6. Assistance in FTA compliant Record Keeping & Documentation. This blog post is written by Mr. Dilip (CA). Feel free to call our Business Adviser today for a quality consultation relating your queries. Please send inquiry to info[at]flyingcolour[dot]com or call +971 4 4542366.