Value Added Tax (VAT)
Value-added tax (VAT) is a tax levied on each value-added level of a product throughout the supply chain. It is collected from each point of sale of the manufacturer until it is sold to the final consumer. This is done by allowing adjustment of the tax paid on purchases, also known as “temporary sales tax credits” or “temporary sales tax”, while VAT on sales is referred to as “temporary sales tax”. Is called. Ultimately, all taxes are paid by the consumer. The United Arab Emirates imposes a standard tax rate of 5% on the supply of goods and services. However, certain supplies such as local passenger transport, designated financial services, medical care, and exports outside the Gulf Cooperation Council will be zeroed by the UAE or exempt from VAT.
VAT Registration UAE
United Arab Emirates VAT Registration Overview
VAT-registered UAE under VAT Act means that the company is recognized by the government as a supplier of goods and services and is allowed to collect VAT from customers and send it to the government. Only UAEVAT registered online number holders and registered businesses can do the following:
- VAT will be charged for the supply of taxable goods and services
- The purchase input tax credit will be deducted from the input tax credit deducted from the sales VAT.
- Pay VAT to the government.
- Submit VAT returns on a regular basis
In addition to the above, all UAE VAT Registered Online Number Holders and Registered Companies adjust their business reporting structure according to compliance requirements such as accurate and updated books, tax documents (receipts, credit notes, debit notes, etc.) need to do it. , All internal supply records, and the need to maintain external supply, etc.
Therefore, understanding the basic knowledge of VAT is one of the important steps to prepare for VAT registration, and obtaining VAT registration is the first step for a business to move into the VAT era. It will be the step of.
Who should register for VAT registration UAE
Are all companies responsible for VAT registration? No, VAT is only applicable to companies that exceed the prescribed total annual sales threshold. Depending on the registration threshold, the company is allowed to register VAT. Alternatively, the company can apply for registration or apply for VAT tax exemption registration.
Based on this, VAT registered UAE can be divided into the following categories:
1. Required VAT registration Dubai
2. Voluntary VAT registration UAE
3. VAT registration UAE exemption
All companies that reside in the United Arab Emirates and have supplied more than 375,000 dirhams in member countries in the last 12 months must register with VAT UAE. In addition, companies must register for UAE VAT registration online if they expect their total supply to exceed the required VAT threshold of AED 375,000 within the next 30 days.
All businesses residing in the United Arab Emirates that do not require a mandatory UAE VAT registration can choose to voluntarily apply for UAE VAT registration online. Can this be higher than the voluntary VAT registration threshold only if the annual supply or tax expense is higher? The voluntary UAE VAT registration online threshold is 187,500 dirhams, accounting for 50% of the mandatory VAT registration UAE threshold.
VAT exemption registration
Companies whose supply from Member States are below the self-registration threshold of AED 187,500 cannot be registered with VAT in the UAE. In addition, companies engaged only in zero-rated supply can request an exemption from VAT registration.
How to apply for VAT registration in the United Arab Emirates
There are two steps to applying for VAT registration in Dubai. You must first create an electronic service account and then complete the VAT registration process.
Create an electronic service account
Online VAT Registration Before proceeding to the UAE, you must use an FTA to create an electronic service account. Setting up an online account in an FTA is very similar to setting up other online accounts (Gmail, Yahoo, etc.). To create an account, you need to go to https://eservices.tax.gov.ae and click on the “Register” option in the upper right corner of the screen. To create an eservices account:
VAT registration UAE process
To apply for VAT registration, you must log in to your e-service account using your login credentials. The details of how to apply for VAT registration UAE are as follows.
- When you log in to your e-service account, you will see the “Register for VAT” option as shown below.
Electronic service account login
- VAT Registration To start the UAE process, click Register for VAT on the dashboard, as shown in the image above.
VAT Registration form steps
The portal will only allow you to go to the next section if the detailed information (indicated by a red asterisk (*)) is captured in all required fields. If one or some required fields are not captured, the portal is designed to remind you with a message indicating the relevant fields for which detailed information must be captured.
Let ’s discuss the details to be captured in the different sections of the online vat Registration form UAE.
- About the applicant
- Applicant Information
- Contact details
- Bank info
- Business relationship
What is VAT Group Registration?
UAE VAT registration allows two or more people engaged in a business to apply for tax registration as a tax group. A tax group is a group of two or more people registered as one taxable person in a free trade area, but must meet the conditions stipulated by the UAEVAT Act. This group registration is for tax purposes only.
VAT group registration application conditions
To meet the VAT group registration application requirements, all of the following conditions must be met:
- Everyone must have a sales office or fixed sales office in this state:
This means that everyone must have one of the following sales offices in the UAE:
Location of establishment: The location where the company was legally established in accordance with the establishment decision in the UAE, or where major administrative decisions are made and central management functions are performed.
- Fixed establishments: Fixed establishments other than those in which an individual conducts business on a regular or permanent basis and has sufficient human and technical resources to provide or acquire goods or services. This includes branches and is considered a fixed institution.
- The parties involved are related parties.
Related parties here refer to two or more people who are not separated at the economic, financial, or regulatory level. One of them may control the other by law or by purchasing shares or voting rights.
- One or more people in the partnership shall control the other.
This means that one or more parties are in control of another business. For example, senior managers or directors of each other’s business, or partners of each other’s business.
- VAT group registration map
- VAT group registration
VAT group registration right
The following are the benefits of VAT group registration for businesses
I. All entities within a VAT group are considered “one” and one tax identification number (TRN) entity. This simplifies VAT accounting and requires compliance reports (such as VAT returns) to be created and reported at the group level (rather than at the entity level).
ii. All supplies within the VAT group entity are excluded from VAT scope. This means that supplies between VAT groups are not subject to VAT. However, VAT is levied on products provided by the VAT Group to entities outside the VAT Group.