VAT is an indirect tax levied on the consumption or use of goods and services at every point of sale. The law is in existence in more than 180 countries around the world. The end-consumer ultimately bears the cost while if the business is registered with the Federal tax Authority they act as Tax Collectors for the government.
Any taxable supplier of goods or services having Taxable Supplies & Imports of more than 375,000 AED need to get themselves registered mandatorily as per Federal Decree-Law No. (8) of 2017. However, if the taxable supplier fails to register with the Federal Tax Authority then they are liable to pay a Penalty of 20,000 AED.
However taxable suppliers of goods or service can opt for Voluntary Registration when their Taxable Supplies, Imports or Expenses cross 187,500 AED. To register voluntarily is an opportunity for start-up businesses to get themselves registered & conduct business with transparency.
Besides being statutory compliance, it is in the best interest for businesses to register themselves for VAT as it creates a conclusive impression of transparency & growth & enables businesses to reclaim VAT i.e., Input Tax Credit on legitimate purchases or expenses.
The due date & the frequency i.e. (Monthly or Quarterly) for filing VAT Returns is defined in the Tax Certificate which is a statutory document obtained after successful registration. The due date for filing of VAT Returns is 28th of the Month following the end of the tax period.
VAT Registration is a 3 Step process wherein various documents & details have to be filed & submitted to the Federal Tax Authority in its 7-step procedure post creation of account.
Step 1: - Creating an e-Services Account.
- Log on to https://eservices.tax.gov.ae/en-us/
- Creating an e-Services Account with a Username/Password
- Verify your email address within 24 hours
Step 2: - Registering for VAT.
- Click Register for VAT
- Complete all mandatory (marked with *) fields
- Click Submit for Approval once to submit the form
Step 3: - Late Registration & Penalty Payment – (Applicable when Registration is Delayed) .
- Go to the Dashboard tab to view the “Late Registration Penalty” amount mentioned under the VAT Box
- Click on ‘Pay’ button to proceed with payment
What are the Comprehensive List of Documents & Information required for VAT Registration in the UAE
- Documents identifying the authorized signatory e.g. passport copy, Emirates ID
- Trade license copy of the company
- Other official documents authorizing the entity/individual to conduct activities within the UAE e.g. certificate of incorporation, articles of association, power of attorney etc.
- Description of business activities
- Turnover for the last 12 months in AED
- Supporting document for 12-month sales
- Expected turnover in next 30 days
- Estimated value of imports for one year from each GCC countries
- Estimated value of exports for one year to each GCC countries
- Whether you expect to deal with GCC suppliers or customers
- Supporting documents for customs registration in each Emirates if applicable.
- Details of Bank Account
Although the process as explained above appears to be simple however, considering the technical requirements of the FTA it is most suitable for businesses to approach a professional or an expert for assistance.
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Contact Avyanco & allow our expert accountants in Dubai to guide you through VAT registration and other accounting services in Dubai. Call/WhatsApp: +971 50 3989000, (T): +971 4 240 5000, Email:email@example.com