Are you planning on establishing a new business in Dubai and seeking a UAE VAT registration? Here is a simple but detailed step-by-step procedure on how to apply for VAT registration.
First, you must understand the different types of VAT Registration services in the UAE.
The Value Added Tax is an indirect tax imposed on the sale. It is the most common type of consumption tax. It has been adopted by more than 150 countries in the whole world. It was introduced to the UAE in January 2018 as it has levied on imported goods and services. Once VAT registration is complete, you will act as the tax collector on behalf of the FTA or Federal Tax Authority.
VAT in UAE is Mandatory
Your business must have a Tax Registration Number. By having this, you comply with the UAE VAT laws that qualify your business to operate whether in the mainland or the free zones. A Tax Registration Number is a 15 digit number assigned to the business. The TRN is issued only once you complete your VAT registration process.
Your TRN acts as proof of your establishment is registered and ready to operate a business. It allows you to claim VAT refunds. It facilitates returns filings. It allows you to collect UAE VAT on sales and pay the government.
There are two types of UAE VAT Registration Services in Dubai: Mandatory VAT Registration and Voluntary VAT Registration.
Mandatory VAT Registration
It is for individuals or companies who have an annual turnover of AED 375,000 or more. If you anticipate having imports of more than this amount, you are required to get this Mandatory VAT Registration. Non-registration will result in a penalty.
Voluntary VAT Registration
This can be applied to individuals or companies that have an annual turnover of AED 187,500 but less than AED 375,000. Although this is optional, you have to register for this if your turnover is within the range. There is no fine or penalty if you do not register though.
VAT Fines for Non-Registration
If your business’ annual AED turnover falls under the categories above you must register your business accordingly. You are given 30 days for the turnover limit. If you fail to do so, you pay a fine of AED 20,000 on top of the registration.
International Company Registration
This applies to non-residents of the UAE and those who do not have a fixed establishment in the UAE. Your category will be under International Company/Foreign/Non-Resident Business. Under such a category you are still obliged to register for VAT and get a TRN. Please take note that if the business registration is done after making a sale, you will receive a hefty penalty.
To comply with these VAT requirements when starting a business in Dubai. You do not want to start your business with a hefty fine. Dubai already offers a foreigner-friendly business setup, you just need to comply. You may consult a business expert to help you out so that the first few steps of setting up your business goes as planned.
