Under the value-added tax (VAT) system implemented on January 1, 2018. UAE VAT registration is mandatory for businesses with annual revenue exceeding AED 375,000 ($102,000).
Registration to the FTA requires a sound basis for the registration, preparation of the necessary evidence, and documentation to proceed without delays or issues. Therefore preparation and planning are key to minimising issues, potential risks, and penalties.
Here are the steps and requirements for VAT registration in the UAE:
1. Determine your business’s eligibility for VAT registration.
To determine your business’s eligibility for VAT registration, you need to consider the following:
- Taxable Income: If your business has revenue exceeding AED 375,000, you must register for VAT calculated on a rolling basis, including the preceding 11 months and the next 30 days.
- Type of business: All businesses operating in the UAE must register for VAT except for a few exceptions. These exceptions include businesses that are exempt from VAT, such as the sale and supply of some financial and insurance services
- Location of business: Businesses operating in the UAE, regardless of location, must register for VAT if they meet the above criteria.
2. Register your business with the Federal Tax Authority (FTA).
To register your business for VAT, you must register it with the Federal Tax Authority (FTA). To do this, below is a summary of the minimum requirements:
- Possess a Trade License: To register your business for VAT, you need a Trade License.
- Register with the FTA: Once you have a Trade License, you need to register your business with the FTA through their e-Services portal. You will need to provide the following information:
- Business name and address
- Bank details
- Type of business activity
- Trade License number
- Details of the business owner(s)
3. Obtain a Tax Registration Number (TRN).
Once you have registered your business with the FTA, you will receive a Tax Registration Number (TRN). This number is unique to your business and will be used for all your VAT-related activities.
4. Set up a VAT accounting system.
To comply with VAT requirements, you need to comply with the provisions as a taxpayer as set out in the Executive Regulations. Ideally, you should set up a VAT accounting system that tracks your business’s VAT-related activities to help with the VAT reporting. This includes:
- Recording the VAT charged on your sales and the VAT paid on your purchases
- Maintaining detailed invoices for all your sales and purchases
- Preparing and submitting VAT Returns to the FTA regularly
VAT returns must be filed regularly, typically quarterly, or monthly. To file a VAT Return, you need to:
- Prepare a VAT Return form: The VAT return form includes details of your business’s sales and purchases for the period and the VAT charged and paid.
- Submit the VAT
- Payment on VAT due