The UAE Federal Tax Authority (FTA) announced the soon-to-commence registration of foreign and local company branches in the UAE for value-added tax (VAT). All businesses operating in the UAE, including foreign and local company branches ought to register for VAT if their annual taxable supplies meet the set threshold. VAT registration in the UAE is mandatory for all businesses to be able to buy and sell products or services. If your business has branches located both in the UAE and abroad, you need to ensure that each of your branches is registered for VAT before the commencement of trading.
What is VAT and How is It Imposed in the UAE?
Value Added Tax (VAT) is an indirect tax applied to the value of goods and services consumed in Dubai. It was introduced by the Government of Dubai in 2018 with the aim of diversifying revenue sources, reducing dependence on oil revenues, and creating a more transparent business environment. In Dubai, VAT is charged at a standard rate of 5% for most goods and services within the Emirate. Certain products like essential food items, education, and healthcare are exempt from taxation while others may attract reduced rates or be subject to zero-rating.
VAT Registration in UAE for Local Companies
Businesses registered in Dubai must register for VAT under certain conditions: if they have taxable supplies that exceed AED 375,000 annually; or voluntarily if their taxable supplies are less than AED 375,000. Businesses must also register for VAT within 30 days of crossing the AED 375,000 threshold or face a fine. Companies registered in Dubai must appoint a tax agent who is responsible for managing all tax compliance activities, filing returns, and paying taxes to the Federal Tax Authority (FTA).
VAT Registration Process in UAE
Foreign companies’ branches operating in the UAE are required to register for VAT through the Federal Tax Authority (FTA). The VAT registration process is simple and can be completed in a few steps.
First, you will need to obtain the Federal Tax Authority ID number by providing your business details such as the name, address, trade license number, and other relevant information.
Once you have the FTA ID number, you must then apply for vat registration and provide the necessary documents to the FTA. This includes your VAT registration application form, VAT return forms, VAT information sheet, and other necessary documents. It is important to note that all the documents must be in English or Arabic language.
Once you have completed your vat registration, you will receive a vat registration certificate. This VAT registration certificate should be kept in a safe place as it will be required when filing vat returns and making vat payments to the FTA.
VAT Accounting Requirements:
All businesses registered for VAT in the UAE have to maintain proper records of incomes, expenses, and vat payments. This includes maintaining separate accounts for vat payments and vat refunds so that they can be tracked easily. The FTA has set out specific guidelines on what documents need to be kept in order to comply with vat accounting requirements. Furthermore, VAT-registered businesses must also submit VAT returns to the Federal Tax Authority on a regular basis.
Other VAT Requirements:
In addition to VAT registration and VAT accounting, there are other VAT requirements that businesses need to be aware of. For example, VAT registered businesses must display vat invoices when selling goods or services, and they must also keep records of all VAT payments made to the FTA. Additionally, companies should ensure they comply with the latest VAT regulations in order to avoid fines and penalties for non-compliance. Overall, VAT registration in UAE can be a complex process for both local and foreign companies, however careful planning and accurate record-keeping should ensure that compliance is achieved with minimal disruption. Working with an experienced VAT advisor or tax agent can ensure that VAT obligations are met efficiently and effectively. We offer VAT consulting services together with useful assistance for your company.
Avail of Top VAT Consultation in the UAE
Essentially, corporations ought to engage with trusted VAT consultants in UAE to enforce tax compliance and to avert the risk of incurring penalties and fines for noncompliance to the Federal Tax Authority regulations and standards. Thus, get in touch with us today and we shall be happy to assist you!
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