VAT registration is essential for businesses in the UAE to comply with tax regulations and avoid penalties. Here’s what you need to know:
1. Who Must Register for VAT?
- Businesses with taxable supplies exceeding AED 375,000 in the past 12 months or expected to exceed this amount in the next 30 days must register for VAT. This applies to all UAE businesses engaging in taxable activities.
2. VAT Rates in the UAE
- Standard VAT Rate: 5% on most goods and services.
- Zero VAT Rate: 0% on exports, international passenger transport, crude oil, natural gas, and public education.
3. Foreign Business Registration
- Foreign businesses with no physical presence in the UAE must register if supplying goods or services to unregistered UAE customers to meet VAT obligations.
4. Voluntary VAT Registration
- Businesses with taxable supplies or VAT-related expenses above AED 187,500 in the past 12 months or anticipated in the next 30 days can opt for voluntary VAT registration. This allows them to reclaim input VAT, improving cash flow.
5. Penalties for Non-Compliance
- Late Registration: AED 10,000 penalty.
- Missed VAT Return Deadlines: AED 1,000 penalty, which doubles to AED 2,000 for multiple violations within 24 months.
- Failure to Pay VAT: 2% penalty on unpaid VAT, plus 4% monthly thereafter.
6. Required Documents for Registration
- Businesses need to submit documents like the Certificate of Incorporation, trade license, Emirates ID & passport of the owner, turnover declaration letter, sales/purchase invoices, IBAN, and a business flow chart.
7. Registration Process on the FTA Portal
- Businesses must create an account on the FTA’s e-Services portal, complete the VAT registration application, and submit supporting documents for FTA review. Upon approval, a Tax Registration Number (TRN) is issued.
8. Filing and Payment Deadlines
- VAT returns are typically filed quarterly, but the FTA may request monthly returns in certain cases. Returns and payments are due by the 28th of the month following the reporting period.
9. Startup Considerations
- Even new businesses without high turnover may voluntarily register if they expect to incur VAT-related expenses above AED 187,500, allowing them to claim input tax credits on initial expenses.
10. Ongoing Compliance
- After registration, businesses must issue VAT-compliant invoices, file returns on time and maintain accurate records to meet FTA compliance requirements and avoid penalties.
How Stratify Can Help with VAT Registration
At Stratify, we simplify the VAT registration process with expert guidance and efficient support:- Guided Registration: Our team handles the entire process, ensuring accuracy and preventing delays.
- Document Preparation: We help gather and prepare all required documents for a successful registration.
- Compliance Support: We offer ongoing assistance to keep your business VAT-compliant, from filing returns to managing payments.
