VAT Registration for Start-ups and Small Businesses in the UAE

VAT registration is a mandatory requirement for businesses operating in the UAE that surpass the required threshold turnover value of AED 375,000. With its introduction, the Federal Tax Authority has channelized how the suppliers of goods and services issue tax invoices. Small businesses that do not reach the mandatory registration threshold must also consider registering for VAT in the UAE. This article explains how VAT registration for startups and small businesses will benefit business owners. VAT Registration UAE is a trusted tax advisor in the UAE that assists Taxable Persons to register for VAT in compliance with the VAT law. 

Key terms for VAT purposes

  1. Taxable Supplies: Items and services subject to VAT are considered taxable supplies. You must charge and gather VAT from your clients when your company produces taxable supplies.
  2. Input tax: The VAT you pay on business-related purchases is input tax. If the assets are connected to the taxable supply, you may be eligible to reclaim this input tax when you submit your VAT return.
  3. Output tax: The VAT you impose on and collect from customers concerning taxable supplies.

VAT registration benefits for startups and small businesses in the UAE

VAT in UAE has several advantages for new and small businesses, this includes:

  • Credibility and Trust: Having your firm registered for VAT raises its credibility and increases its appeal to potential customers and business partners. It is because once you register for VAT, you are given a TRN number for your company. This helps verify the trust and credibility of a supplier of goods in the UAE.
  • Recovery of Input Tax: By recovering input tax, you lower the overall VAT burden for your company, which has a favourable effect on your cash flow.
  • Avoiding Penalties: By registering on time, you can avoid penalties and fines for failing to comply.

How to Register for VAT for startups and small businesses in the UAE

A step-by-step tutorial for registering for VAT is provided below:

  1. Determine your eligibility by Checking to see whether your imports and taxable supplies exceed the AED 375,000 limit. If so, you must file a VAT registration.
  2. Compile necessary paperwork, such as business licenses, identity papers, and accounting records.
  3. Create an e-Services account: Go to the Federal Tax Authority (FTA) website and do so.
  4. Sign up online: Enter your e-Services login information to finish the VAT registration application. Send in all required paperwork following FTA guidelines.
  5. Await confirmation: Following the FTA’s evaluation of your application, you will be sent a certificate confirming your VAT registration.

Read more: How to register for VAT in the UAE for a new company

Start-up Special Cases for VAT Registration in the UAE

If your start-up is new, the following points should be carefully considered:

  • Start-ups below the threshold are not required to register for VAT; however, doing so voluntarily may be advantageous. You can use that to recover input tax and establish a reputation.
  • Pre-registration Expenses: Up to six months before the date of your VAT registration, you may claim the VAT you paid on goods and services. This covers setup expenses so you can recoup your initial outlays.
  • Margin Scheme for Used Items: If your startup sells used items, the margin scheme can be applicable and lower your VAT liability.

VAT Compliance for Small Businesses and Startups

Once registered, it is essential to make sure of VAT compliance. Here are some pointers to maintain compliance:

  • Correct Invoicing: Make sure you charge the right amount of VAT by sending clients accurate VAT invoices.
  • Maintain accurate and well-organized accounting records, especially those for sales, costs, and VAT transactions.
  • VAT Return Filing: Submit VAT returns on time, often once every three months, with any required payments.
  • Reverse Charge process: When working with imported services, be aware of and use the reverse charge process.

Seek the expert services of VAT Registration UAE

Taxable Persons are advised to seek expert VAT advisory to seamlessly register for VAT in compliance with the statutory regulations. VAT Registration UAE are trusted tax advisors in the UAE who assist Taxable Persons to register for VAT in compliance with the VAT law. Thus, contact us today and we shall be glad to assist you.