VAT stands for value-added tax. It is a tax levied based on their consumption rather than their income. It is imposed on the price of a product or service at each production stage, distribution, or sale to the end consumer.
Value-added tax, or VAT in the UAE, commenced on the 1st of January, 2018. The regulation was started as a means to provide the UAE with a new source of income which will be continued to be utilised to provide high-quality public services.
Benefits of VAT Registration in UAE:
- Since VAT is levied on the consumption of goods and services, it ensures that the government is at the receiving end of a stable revenue generation mechanism.
- VAT in the UAE aims to simplify the tax collection system by making the taxes levied less complicated and repetitive.
- It promotes savings among consumers.
- VAT registration in the UAE proposed complete digitalization and computerization of the tax collection system.
- VAT is collected in small instalments, so the consumers have minimal burden.
Who can register for VAT in UAE?
- Mandatory VAT registration in UAE for businesses whose annual turnover is more than AED 375,000.
- Voluntary VAT registration in UAE for businesses whose annual turnover is between AED 187,500 & AED 375,000.
- Startups whose VAT attracted expenses are more than AED 187,500.
Step-by-step Guide For VAT Registration in UAE
1 Step: create an account on the digital portal of the Federal Tax Authority, UAE.
2 Step: upon registering for an account, commence the procedure as guided by the website. For this, you may need to prepare a few new documents in advance.
- Copy of Trade License
- Passport copy (Owner/partners)
- Emirates ID (Owner/partners)
- Memorandum of Association (MOA)
- Company’s Bank Account details and IBAN
- Details Business Turnover for the last 12 months (Balance Sheet, Audited Reports or Bank Statements)
- Customs Authority Registration code
- Company’s registered address and P.O. Box.
- Projected revenues and expenses for the next 30.
- Details of Business Activities. (Import/Export or Trading).
- Names of GCC countries if doing business in them.
- Name of Tax Group (if they want one tax group number for all the entities).
3 Step: once you submit all relevant details and documents successfully, you will receive a Tax Registration Number (TRN) upon approval by the FTA.
Voila! You’re done!
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