The Value Added Tax (VAT) was initiated in the United Arab Emirates in the year, 2018. The Dubai government made it mandatory for businesses or companies in Dubai to register and acquire a VAT certificate which has a tax registration number to help the government keep track of all the transactions made by businesses.
If you are a new entrepreneur about to set up a business or company in Dubai, then this is for you.
In this article, you’ll learn how to register for VAT (value-added tax) in Dubai.
Just read on as you learn all. But first, let’s see what VAT registration means.
What is VAT registration?
This is an online procedure to obtain a Tax registration number mandated by the Dubai government through the Federal Tax Authority web portal.
Value Added Tax (VAT) is a kind of tax on the consumption or use of goods and services. A VAT of 5 percent is charged at every point of sale. Businesses collect and account for the tax on behalf of the government.
You still don’t understand it?
Well, this is how it works:
The Dubai government imposes VAT on companies with an annual turnover of 375.000 AED at a rate of 5 percent on a taxable supply of goods and services in Dubai.
So, on behalf of the government, all VAT-registered businesses collect or add a 5 percent increase in the cost of every taxable good or service consumers purchase.
This is to help the government generate revenue which they use to build infrastructure, provide social amenities and also support the government’s aim towards having less reliance on oil as the only source of revenue in the region.
2 types of VAT registration
VAT registrations are of 2 main types. They are as follows:
- Mandatory VAT registration
- Voluntary VAT registration
Mandatory VAT registration
In this kind of VAT, the Dubai government made it mandatory for businesses or companies to apply for VAT registration if the taxable supplies and imports exceed the compulsory registration limit of AED 375,000 over the last 1 year.
Voluntary VAT registration
In this case, a company or business can also decide to register for VAT voluntarily when the total value of its imports and taxable supplies in the last 1 year exceed the voluntary registration threshold of AED 187,500 in the coming next 30 days.
Advise: know that this threshold does not apply to foreign businesses in the Emirates, and even if you have other companies operating in other parts of the UAE, your one VAT certificate controls all your businesses.
In addition, you can also choose to form a Tax group and apply for registration if you have more than 50% shares in 2 or more companies.
In Tax group registration, different companies or businesses of all kinds formed a group where the Federal Tax Authority (FTA) issue them a single Tax Registration Number (TRN) that covers whatever transaction all the companies involved make.
To create a Tax group VAT registration, the person representing the company must have a Tax Registration Number (TRN) and each of the members forming this tax group must:
- Be a resident of Dubai; and not a member of another Tax Group
- Be a legal and reliable individual
How to apply for VAT registration in Dubai?
Here are some steps to follow up on if you want to apply and have your VAT certificate in the Emirates.
The 5 steps include:
- Create an e-service account.
- Login and sign up to the FTA web portal.
- Click on “Register for VAT”.
- Fill out the VAT application form and upload the needed documents.
- Click the submit for approval.
Just read on to learn more as we examine all of them one after the other.
Create an e-service account
The first step to take when applying to register for a VAT is to, first of all, create an e-service account with the Federal Tax Authority (FTA). This is to enable you to have access to their web portal.
Creating an e-service is quite easy to do, all you’ll do is, visit their website or type eservices.tax and follow the number 2 step below.
Login and sign up to the FTA web portal
When you have created an account with the FTA, sign up with your valid email address, and get a password, then proceed to the next step.
Click on “Register for VAT”
After signing in with your details, then scroll down and click on “Register for VAT”. A guide will appear; this guide provides you with all the details on how to progress with the registration. So ensure to read it thoroughly to understand what is involved.
Fill out the VAT application form and upload the needed documents
By this time, you’ve examined the guide and understand what it entails, and agreed to its policy, you can now go ahead to fill out the VAT application form with the right details.
The VAT online registration application form comprises eight (8) columns or sections as indicated below,
- (Section – 1) – This section is about the applicant.
- (Section – 2) – Details of the applicant.
- (Section – 3) – Contact details of the applicant.
- (Section – 4) – Your banking and partner details, if any.
- (Section – 5) – Business relationships, if any.
- (Section – 6) – About the VAT registration.
- (Section – 7) – Declaration.
- (Section – 8) – You review and submit.
Ensure you fill all the sections with the right information and attach all the vital documents to complete the VAT registration.
The documents required for VAT registration are as follows:
- A copy of your trading license.
- Your Emirates ID.
- 2 passport copies of you and your partners, if any.
- Your Memorandum of Association(MOA).
- Complete address of your company.
- The bank details of your company.
- The regular revenue and all expenses for the next 30 days.
- Your contact details (your email, phone numbers, home address, security code, etc).
Click the submit for approval
This is the final stage of the VAT registration process in Dubai. However, ensure you fill out all the essential fields and read it well enough to dictate if there’s any error, but if there is none, just click on “Submit for approval”, that is all.
Then, the Federal Tax Authority will take it from there to review your application and if you meet all the VAT registration requirements, they’ll issue you a VAT certificate within a few working days.
All these steps to register for VAT needs your maximum time, attention, and hard work before you can succeed in this journey, but if you want to make the journey easy for you, you’ve to seek support from the best team business consultant in Dubai Masar AI Ameen – they’ll make your VAT registration journey not only easy and stress-free but fast, till you get your Tax registration number.
As stated above, in Dubai, businesses must apply for VAT registration if the taxable imports and supplies exceed the compulsory registration threshold or limit. And, you can also decide to apply voluntarily for VAT registration if your total value taxable expense and taxable supplies are over AED 187,500 in the subsequent 30 days.
There is an exemption for VAT registration in Dubai, though this is possible if your business is making zero-rated supplies in the UAE.
However, all companies or businesses making over 375.000 AED in UAE are mandated to register for VAT and impose a 5% increase to consumers in the cost of taxable goods and services they purchase in Dubai.
We hope the information here helps guide you in your career journey to getting your TRN. But you should always seek support from business experts in Dubai Masar AI Ameen – to help make the journey of your VAT registration easier and faster than ever.
Good luck as you take the bold steps.