Cancel VAT TRN UAE: Why VAT Deregistration Matters
VAT deregistration (or cancellation of a VAT TRN in the…
Vat Accounting in Dubai, UAE
Value Added Tax or VAT is a tax on the consumption or use of goods and services. VAT is charged at each step of the “supply chain”. Businesses collect and account for the tax on behalf of the government. VAT was introduced in the United Arab Emirates (UAE) on 1st January 2018 at a standard rate of 5%. This tax is levied on most goods and services, and therefore, VAT accounting is a must for businesses in the region. Since VAT accounting in UAE is quite difficult and demands a high level of documentation and data analysis it is crucial to seek the help of a professional VAT consultant in order to get it right.
When it comes to VAT accounting in Dubai and UAE, VAT Registration UAE is one of the most preferred names by diverse businesses across the country. The VAT accounting services in Dubai are designed to assist your business in documenting and tracking your VAT transactions and meet the requirements of the UAE VAT law.
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VAT Accounting Services in UAE
VAT accounting is important as it ensures that the company is VAT compliant and minimizes penalties that come with violations of the UAE tax laws. Some of the VAT accounting services we offer in the UAE include:
- VAT Registration and De-registration: Helping organizations with obtaining or canceling the VAT registration as per the Federal Tax Authority (FTA) regulations.
- VAT Return Filing: We calculate and present the VAT returns accurately and on time as required by the law.
- VAT Compliance Review: Carrying out routine audits to check that the organization is fulfilling the requirements of the VAT laws and regulations.
- VAT Advisory Services: Offering advice on all matters relating to VAT in order to achieve the maximum possible tax benefit.
What is VAT Accounting?
VAT accounting means recording and reporting VAT on taxable transactions. Business receive VAT on sales, or output tax, and pay VAT on purchases, or input tax. The difference between output and input tax determines the VAT payable or refundable. Proper VAT accounting helps to ensure that businesses discharge their tax responsibilities and stay within the purview of the FTA.
Who Needs VAT Accounting in UAE?
VAT registration is a mandatory requirement in the UAE for businesses whose taxable supplies and imports are more than AED 375,000 per year. Those with taxable supplies and imports between AED 187,500 and AED 375,000 can also choose to register voluntarily. These businesses need to get their VAT accounting right to navigate their tax obligations correctly.
Key Aspects of VAT Accounting in UAE
- Tax Invoices: Preparing tax invoices that are FTA compliant and carrying TRN (Tax Registration Number) where necessary.
- VAT Returns: Filing of VAT returns within 28 days after the end of the tax period as prescribed by FTA.
- Record Keeping: Preserving all documents that relate to all transactions for a minimum of five years.
- VAT Payments: Making sure that all VAT liabilities are paid on time to avoid incurring penalties.
Important Documents Required for VAT Accounting in UAE
To ensure that VAT accounting is done correctly, the following documents should be kept by the businesses;
- Sales and Purchase Invoices: All the sales and purchases records.
- Credit and Debit Notes: Documentation of any changes made to the invoices.
- VAT Returns and Payment Receipts: Copies of the filed VAT returns and the proof of payment made.
- Any other relevant documents
Why Do You Need Proper Accounting for VAT?
VAT accounting is very important for several reasons:
- Compliance: To ensure that the UAE VAT laws are followed without having to face any legal consequences.
- Financial Accuracy: Gives a correct and precise view of the tax liabilities and entitlements that are present in the company.
- Penalty Avoidance: Prevents penalties related to non-filing of returns or late filing of returns.
- Business Reputation: Preserves the trust of the various stakeholders by showing fiscal responsibility.
Benefits of Hiring a Professional VAT Accountant in UAE
There are many advantages of engaging a professional VAT accountant.
- Expertise: The client has a way of getting up-to-date VAT laws and regulations knowledge.
- Time-Saving: Enables business owners to carry out their core business activities while leaving VAT matters to experts.
- Risk Mitigation: Minimize the chances of making mistakes that could attract penalties.
- Strategic Planning: Provides an understanding of tax planning and optimization strategies.
Why Choose Our VAT Accounting Services in UAE?
VAT accounting services we offer in the UAE are:
- Customized Solutions: Solutions developed to address unique business requirements.
- Experienced Professionals: A team of certified accountants with vast experience in VAT.
- Transparent Pricing: Clear and competitive pricing structures.
- Client-Centric Approach: We offer dedicated support to achieve client satisfaction.
Industry-Specific VAT Accounting Service
The application of VAT varies across industries such as real estate, healthcare, education, financial services, and e-commerce, each of which is subject to distinct provisions relating to zero-rated supplies, exempt transactions, place of supply, and input tax recovery.
Our Industry-Specific VAT Accounting Services are designed to ensure that businesses comply with the applicable VAT law by:
- Implementing VAT rules tailored to the specific requirements of each sector.
- Accurately classifying transactions as taxable, exempt, or zero-rated.
- Managing input tax recovery in accordance with sector-based provisions.
- Preparing and filing VAT returns in compliance with Federal Tax Authority (FTA) regulations.
- Providing expert guidance on complex VAT matters, including cross-border transactions, free zone
operations, and mixed supplies.
Through a comprehensive and industry-focused approach, we assist businesses in minimizing compliance risks, optimizing tax recovery, and maintaining full adherence to the requirements of the Federal Tax Authority.
Common VAT errors businesses make in 2025 and how to avoid them?
Under the UAE VAT Law, businesses continue to make recurring VAT compliance mistakes. In 2025, the most common errors include:
- Incorrect Input VAT Recovery: Claiming VAT on non-deductible expenses (e.g., entertainment, personal use) or failing to meet documentary requirements (such as valid tax invoices).
- How to avoid: Review expenses regularly, maintain proper tax invoices, and ensure alignment with Article 54 of the VAT Law.
- Errors in Tax Invoices: Missing mandatory details such as TRN, tax amount, or invoice date.
- How to avoid: Follow Article 59 of the Executive Regulations, use automated accounting systems, and carry out periodic invoice audits.
- Incorrect VAT Rate Application: Misapplying the 5% standard rate instead of the 0% or exempt category (especially for exports, financial services, and real estate).
- How to avoid: Train staff, maintain VAT rate matrices, and stay updated with FTA guidance.
- Late VAT Return Filing or Payment: Missing the FTA deadlines, leading to penalties under Cabinet Decision No. 49 of 2021 on administrative penalties.
- How to avoid: Use automated reminders and FTA’s EmaraTax platform for timely submissions.
VAT accounting affect free zone companies in 2025
Free zone companies in the UAE are subject to VAT depending on their business activity, the nature of supplies, and whether they operate inside a Designated Zone.
- Designated Free Zones (DFZs):
- Supplies of goods between designated zones may be outside the scope of UAE VAT if certain conditions are met.
- However, supplies of services within DFZs remain subject to VAT at the standard rate (5%).
- Non-Designated Free Zones:
- Companies are treated the same as mainland entities and must charge VAT on taxable supplies.
- Impact on Accounting:
- Free zone companies must maintain clear segregation of goods and services supplied inside and outside the free zone.
- They are required to issue tax invoices, file VAT returns, and comply with FTA record-keeping requirements (minimum 5 years under Article 78 of VAT Law).
- If involved in both taxable and exempt activities, free zone businesses must perform input VAT apportionment to recover only the allowable VAT.
Frequently Asked Questions (FAQs)
What are the rules for VAT in UAE?
VAT standard rate of 5% is applied by the UAE on most goods and services. It is mandatory for businesses to register for VAT in the following two cases:
- If the taxable supplies and imports of a UAE-based business exceed AED 375,000 per annum
- If a non UAE-based business makes taxable supplies in the UAE, regardless of its value, and there is no other person obligated to pay the due tax on these supplies in the UAE.
What are the methods of accounting for VAT?
UAE companies may use the following accounting methods for VAT:
- Accrual Basis: Account for expenses and revenue when earned or incurred, regardless of cash receipts or payments.
- Cash Basis: Account for revenue and expenses when cash is paid or received—appropriate for small enterprises.
- Input and Output Tax Accounting: Track VAT on purchases (input tax) and sales (output tax). The net VAT is paid by or refunded to the Federal Tax Authority (FTA).
How to calculate VAT in accounting?
VAT is calculated by applying the 5% rate to the taxable amount. For example, if a product costs AED 100, the VAT would be AED 5, making the total price AED 105.
What is the VAT formula?
The VAT amount is calculated using the formula:VAT = (Price × VAT Rate) / 100For example, if the price is AED 500 and the VAT rate is 5%, then:VAT = (500 × 5) / 100 = AED 25So, the total amount payable would be:AED 500 (price) + AED 25 (VAT) = AED 525
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