VAT Guide for Startup Business in UAE

There are so many sets of rules and regulations for VAT in UAE. Proper advice from qualified professionals is absolutely necessary, most especially for startups and small businesses. Here is the vat guide for startups in UAE.

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VAT Guide for Busines Startups

  1. Businesses in the UAE need to undergo the VAT registration process if the taxable turnover from the previous twelve months is exceeding the VAT threshold. This includes startups and sole traders and not just limited liability companies. 
  2. The threshold for VAT in UAE is Dhs 375,000 for mandatory registration. 
  3. A business is eligible for Vat deregistration if taxable turnover is below the mandatory VAT registration threshold of Dhs 375,000.
  4. The startup has to register for VAT when it expects to reach the turnover threshold in the following thirty days. 
  5. If a business is registered for VAT, it is to charge VAT for all sales that are eligible. The standard VAT’s rate in the UAE is five percent while some items are zero-rated or exempt.
  6. When a business is registered for VAT, it is able to reclaim VAT for business purchases.
  7. For a VAT-registered business in UAE, it’s going to work like the tax authority’s unpaid tax collector as it will be paying VAT to the FTA that is charged on products and services sold by the business minus the VAT paid on business purchases.
  8. Inform your customers about the vat registration of the business. Businesses can charge vat on the products/services. The invoices should contain the vat amount charged.
  9. Through VAT return filing in UAE, customers may be able to claim the paid VAT from your business resulting in purchasing supplies or services for less. 
  10. Non-vat registered businesses in UAE cannot claim vat for their business purchases.
  11. The addition of VAT gives an edge over the non-vat registered businesses. 
  12. A VAT-registered startup has to file VAT returns regularly. The regulated tax agents in Dubai, UAE can help to keep accounts updated and tax returns are filed on time.
  13. VAT registration in UAE is great for a startup as it can seem like the small business is a major player in the industry. As a startup, you’d want to grow. A great way in developing a steady client base is by presenting the business as an established one.
  14. Startups that haven’t reached the mandatory VAT registration threshold can take voluntary vat registration. If annual taxable supplies are between Dhs187,500 and Dhs375,000, then businesses can voluntarily register for vat.
  15. Voluntary registration for VAT is great as it allows startup owners not have to worry regarding reaching the threshold for mandatory VAT registration and failing to notify the tax authorities.

If you want to know more about VAT registration in UAE, continue reading below for some FAQs or contact us today to talk to VAT Registration UAE’s regulated tax consultant in Dubai

What will happen if I don’t file VAT returns in UAE on time?

Failure in vat return filing can result in a vat fine or penalty in addition to settling the VAT. Give the necessary information and records of transactions to the regulated tax agents. They will help you and ensure that the business is fully compliant with tax legislation.

Will I be able to get VAT refunds?

Yes, this is one major benefit of registering for VAT. All expenses of the businesses with VAT paid will be subject to VAT refunds. We advise startups to consult with experts to address their specific needs and requirements.