What is VAT?
Value Added Tax (VAT) is a transaction-based indirect tax that plays a pivotal role in the global economic landscape, with more than 180 countries, including the UAE, incorporating it into their tax systems. Understanding the nuances of VAT registration is crucial for businesses operating in the UAE to ensure compliance with tax regulations. In this comprehensive guide, we delve into the intricacies of VAT, the types of registration, and the essential documents required for a seamless registration process.
Understanding VAT Registration in the UAE:
VAT in the UAE is a consumption tax levied at each step of the supply chain. Unlike a general sales tax, VAT is a sophisticated system that places the onus on businesses to collect and account for the tax, essentially acting as tax collectors on behalf of the Federal Tax Authority. End consumers bear the ultimate cost of VAT, making it imperative for businesses to navigate the registration process effectively.
Types of Registration:
Mandatory Registration: Businesses must register if the total value of taxable supplies and imports exceeds AED 375,000 (USD 100,000) over the previous 12 months or is expected to do so in the next 30 days. This threshold doesn’t apply to foreign businesses.
Voluntary Registration: Businesses can choose to register voluntarily if their taxable supplies and imports or taxable expenses surpass the voluntary registration threshold of AED 187,500.
Taxable Supply Definition: For registration purposes, a taxable supply refers to the provision of goods or services in the UAE that may be taxed at rates of either 5% or 0%. Imports are also considered in this context.
- Basic Documents Required for VAT Registration in Dubai, UAE
It will be necessary for you to prepare the following information in an appropriate format and include it in your online application:
- Valid trade license(s)
- Passport/Emirates ID of the authorized signatory(s)
- Proof of authorization for the authorized signatory(s)
- Contact information
- Bank letter validating the bank account details of the applicant.
- Last 12 months Sales numbers (Revenue) separately for each month
- Some Sample sales invoices
- Bank Statement might need to show the revenue credit
Depending on the basis on which you are registering, other relevant documents may include:
For taxable supplies (applicable for all legal types except Federal and Emirate Government)
- Audit report audited or non-audited financial statement.
- Self-prepared calculation sheet which may include details to calculate the taxable/zero-rated supplies based on financial records
- Revenue forecast with evidence (e.g., Local Purchase Order or Contract)
- Monthly turnover declaration for the specified periods that is signed and stamped by the authorized signatory on the entity’s printed letterhead
- Supporting financial documents (e.g., invoices/LPOs/contracts/title deed/tenancy contracts)
For taxable expenses (applicable for all legal types except Federal and Emirate Government):
- Audit report, audited or non-audited financial statement
- Expense budget report
- Articles of Association/Partnership Agreement (if applicable)
- Certificate of Incorporation (if applicable for Legal Person)
- Documents which show ownership information of the business
- Customs details (if applicable)
- Power of Attorney documents (if applicable)
- Club, charity or association registration documents and supporting evidence (applicable if you selected “Legal person – Club, Charity or Association”)
- A copy of the Decree (applicable if you selected “Legal person – Federal UAE Government Entity” or “Legal person – Emirate UAE Government Entity”)
- Other relevant documents such as documents providing information about your organization, including its activities and size (applicable if you selected “Legal person – Other”)
- A scanned copy of the Emirates ID and passport of the manager, owner and senior management
VAT Deregistration in Dubai, UAE
There are instances when deregistration becomes necessary due to changes in business operations or turnover. In this guide, we explore the intricacies of VAT deregistration, including the circumstances that warrant it, the process involved, and key considerations to ensure a smooth transition.
- Mandatory and Voluntary Deregistration: VAT deregistration becomes mandatory if a business ceases operations or if its taxable turnover falls below the voluntary registration threshold of AED 187,500. Alternatively, a business can choose to apply for deregistration voluntarily if its taxable turnover exceeds AED 187,500 but remains below the mandatory registration threshold of AED 375,000.
- Timely Application Submission: To initiate the deregistration process, businesses must submit the application to the Federal Tax Authority (FTA) within 20 business days from the event triggering the need for deregistration. Adhering to this timeframe, as outlined in Article 21 of the VAT Law, is crucial for a hassle-free process.
- VAT Deregistration Process:
a) Submitting the Application: Access the online account and complete the VAT deregistration application accurately. Specify the effective date for deregistration and upload all necessary supporting documents.
b) Final VAT Return: After application review, the FTA will instruct the submission of the final VAT return. Timely compliance is essential.
c) Settling Liabilities: Clear any outstanding liabilities, including pending penalties. If in a credit position, consider submitting a refund application during deregistration.
- Final Return and Filing Obligations: The final return represents the last tax period under FTA registration. Ensure timely filing and settlement of any payable tax within 28 days from the effective date of deregistration to avoid penalties.
- Late Deregistration and Penalties: Failure to submit the deregistration application promptly may incur penalties, starting at AED 1,000 for the initial delay and additional monthly penalties up to AED 10,000.
- Deregistration Application Submission: The application can be submitted by the VAT registrant, a tax agent, or a legal representative.
- Draft Submission and Cancellation: Save an in-progress deregistration application as a draft. However, failure to submit within 60 calendar days will result in automatic cancellation.
- Planet Registration and Deregistration: For those registered with Planet, a tourist refunds system, deregistering the VAT TRN from Planet is mandatory during the VAT deregistration process.
- FTA Review and Certificate Issuance: Upon submission, the FTA reviews the application and may request additional information. Following approval, a VAT deregistration certificate is issued, accessible via the Emaratax account.
- Continued EmaraTax Account Access: Deregistration doesn’t deactivate the EmaraTax account; it remains accessible with updated VAT registration status.
- Estimated Processing Time: While the FTA aims to complete deregistration within 20 business days, additional processing time may be necessary.
Navigating the VAT deregistration process in the UAE is a critical undertaking for businesses, and a thorough comprehension of the prerequisites and procedures is indispensable for ensuring legal compliance. This in-depth guide offers valuable insights into the timing of deregistration, the application process, associated time limits, penalties, and other crucial particulars.
VAT Group Registration in Dubai, UAE: A Comprehensive Overview
Understanding VAT Group Registration:
In the UAE, businesses have the option to streamline their VAT processes through group registration. This method allows multiple companies to share a single VAT number, collectively forming a ‘bodies corporate’ entity for VAT purposes. The group functions as one taxable individual, with the representative member’s name on the VAT registration number. However, each member is jointly and severally accountable in case of VAT debt or default.
Advantages of VAT Group Registration in Dubai,UAE:
The primary goal of VAT group registration is to simplify processes and reduce expenses associated with individual VAT registrations.
Key advantages include:
- Consolidated VAT Return: Each VAT group can submit a consolidated VAT return, reducing administrative costs.
- Intra-Group Transactions: Transactions between group members are not subject to VAT, simplifying VAT accounting for such transactions.
- Importation Responsibility: The representative member is responsible for paying applicable VAT on any member’s importation of goods.
- Flexibility: Businesses can easily add or remove entities from the VAT group, providing flexibility in group composition.
- Cost Reduction: Group registration lowers individual costs and administrative expenses, distributed among returns, payments, and registrations.
Conditions for VAT Group Registration:
To be eligible for VAT group registration in the UAE, businesses must meet specific criteria:
- Established Presence: Each member must have an established establishment or place of business within the UAE.
- Legal Person or Fixed Establishment: Members must be legal persons, not natural persons, with a formal establishment or fixed place of business in the UAE.
- Related Parties: Group members must be related parties lacking geographical, economic, or legal separation, with one having control over the others.
- Partnership Control: In a partnership, one or more partners must exert control over the others.
Significance of Not Being a Member of Another Tax Group:
It is crucial to recognize the implications of not being a member of another tax group for VAT purposes. While forming tax groups offers advantages, businesses need to consider the specific implications and considerations associated with this decision.
VAT Group Registration Process:
Companies seeking VAT group registration must select a representative member who submits the application through the online tax group form. The application requires various documents, such as group structure details, trade licenses, incorporation documents, and financial statements.
Possible Reasons for Application Rejection:
Authorities may reject a VAT group registration application under specific circumstances:
- Non-compliance with registration requirements.
- Substantial risk of tax evasion or reduced tax revenues.
- Inclusion of a non-legal person.
- Inconsistencies with government entity or charity status.
- It’s crucial to note that rejection may occur if combined taxable supplies, imports, and services fall below the mandatory registration threshold.
In conclusion, VAT group registration in the UAE offers operational efficiency and cost savings for eligible businesses. Understanding the criteria, advantages, and the application process is essential for a successful VAT group registration.
Discover Seamless VAT Solutions with Elevate Accounting & Auditing in the UAE!
Elevate Accounting & Auditing, a premier auditing firm in the UAE, offers a comprehensive suite of VAT services tailored to meet your business needs. Our expert team is dedicated to simplifying complex processes and ensuring your compliance with VAT regulations.
Why Choose Elevate?
- Expertise: Benefit from the knowledge and experience of our VAT professionals who stay abreast of the latest regulatory changes.
- Elevate First Accounting & Auditing is an approved TAX Agency in the Federal Tax Authority, UAE Tax Agent Approval Number (TAAN) 20007621
- Tailored Solutions: Our services are customized to fit the unique requirements of your business, ensuring precision and accuracy in every step.
- Comprehensive Support: From initial VAT registrations to audits and liaising with the Federal Tax Authority (FTA), we provide end-to-end support for all your VAT needs.
- Timely Compliance: Stay ahead of deadlines with our proactive approach, ensuring timely VAT return filings, voluntary disclosures, and reconsideration when needed.
- Transparent Communication: We keep you informed at every stage, fostering transparent communication and empowering you with the knowledge to make informed decisions.
At Elevate Accounting & Auditing, we go beyond being your service provider; we become your reliable partner in navigating the dynamic landscape of VAT Services in Dubai, UAE. Trust us to elevate your VAT experience and ensure compliance with confidence. Contact us today to explore a seamless VAT journey tailored to your business.
OUR VAT SERVICES INCLUDE THE FOLLOWINGS:
- VAT Registrations
- VAT Return filings.
- VAT Refunds.
- VAT Voluntary disclosure.
- VAT Reconsideration.
- Vat deregistration service
- VAT Audit
- Liaison with FTA on their tax-related matters