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How to Register for VAT in UAE: Complete Guide for UAE Business Owners

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How to Register for VAT in UAE

The 2018 fiscal year saw the introduction of Value Added Tax (VAT) in the United Arab Emirates (UAE), marking a turning point for the nation’s fiscal system. This new revenue stream has been instrumental to the country’s infrastructural development and essential public services.

While the Federal Tax Authority (FTA) is responsible for receiving VAT payments in UAE? The duty for VAT collection falls squarely on the shoulders of qualified registered businesses in the UAE for any goods or services offered to end consumers.

As a business or taxable individual in the UAE, it’s vital to understand the VAT registration in the UAE, its implications, and why you should seek expert assistance from an experienced VAT service provider in Dubai and the UAE. In this guide, we’ll equip you with the knowledge of VAT registration in the UAE to make informed decisions.

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What is VAT, and Why was it introduced in UAE?

The Value Added Tax (VAT) is an indirect tax levied by the government to customers at every point of sale on the purchase of goods and services.  

The VAT in UAE was introduced as one of the many ways to diversify and strengthen the nation’s financial revenue generation and to reduce the government’s dependency on oil and gas.

What is The VAT Rate in UAE?

The standard rate for VAT in the UAE is 5%. However, some specific goods and services are subjected to a 0% VAT rate (exempt). This makes the UAE a very favorable and competitive market due to its low tax rate and other incentives compared to other countries.

Why Should Businesses Register for Value Added Tax in UAE?

VAT registration in the UAE isn’t mandatory for all businesses. However, it is required for companies exceeding a threshold of AED375,000 of their annual revenue to register for VAT in the UAE. Also, companies with annual income below AED375,000 can voluntarily register for VAT for all taxable supplies.

The benefits of VAT registration in UAE include:

  • Recovering VAT paid on business expenses.
  • Enhancing your business credibility and professionalism.
  • Competing on a level playing field with other VAT-registered businesses.

Are Freezone Entities in UAE exempted from VAT?

A business setup in the UAE freezone may be exempted from VAT registration depending on its license type and business activities.

For example, if a freezone company offers commercial activities in the UAE or offers goods and services in the UAE mainland, they may be obliged to register for VAT.

As a business in UAE, we recommend consulting with an expert VAT service provider in UAE to understand your VAT obligations.

What are the Penalties for not Registering for VAT in UAE?

For businesses that are mandated to register for VAT in UAE, failing to meet the mandatory registration deadline or the voluntary registration threshold can lead to hefty fines such as:

  • AED 10,000 Penalty.
  • 2% of the unpaid tax amount for late payment

What are the Types of Value Added Tax services in UAE?

VAT services in the UAE comprise a range of solutions to streamline your VAT compliance. These include:

  • VAT Registration Services
  • VAT Return Filing Services
  • VAT Refund Services
  • VAT Accounting Services
  • VAT Audit Services
  • VAT Consultancy Services
  • VAT De-Registration Services
  • Accounting & Bookkeeping

What Documents Are Required For VAT Registration in UAE?

The documents required for VAT registration in the UAE may vary depending on your business structure and license type. However, the most common documents include:

  • Trade license copy.
  • Emirates ID copies of business owners and partners.
  • Passport copies of business owners and partners.
  • Proof of business address.
  • Financial statements (if applicable).
  • Memorandum of Association (if applicable).

How Can Corporate Business Services (CBS) Guide You?

As a leading provider of expert business consultancy services in Dubai and the UAE, CBS offers comprehensive suites of business services in Dubai, UAE. Our team of specialists can assist you with:

By leveraging our expertise, you can ensure a smooth and compliant VAT registration process, freeing you to focus on growing your business in the UAE.

UAE Business Setup Guides

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Office: Office #1601, 48 Burj Gate Tower, Downtown Dubai – UAE

Tel: +971 4 404 8787

Email: ask@cbs-uae.ae

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