VAT
VAT registration in Dubai, UAE
We help businesses to ensure an error-free and on-time VAT Registration.
VAT
Value Added Tax (VAT) was introduced in the United Arab Emirates on January 1, 2018, as part of the country’s efforts to diversify its revenue sources. The standard VAT rate is set at 5%, which applies to most goods and services. However, certain goods and services, such as education services, healthcare, and charitable activities, are either exempt from VAT or subject to a 0% rate.
VAT is an indirect tax, meaning it is applied to the consumption of goods and services at the point of sale. In the UAE, businesses that are VAT-registered are responsible for collecting VAT on behalf of the UAE Federal Tax Authority (FTA) and remitting it to the government.
According to the Federal Decree-Law No. (8) of 2017 on Value Added Tax, the FTA has classified VAT into three categories: the standard 5% rate, the zero-rated category, and the exempt category. Zero-rated items include certain goods and services like exports and international transport, while exempt items include financial services, residential real estate, and specific health and education services.
For businesses operating in the UAE, it is crucial to ensure proper VAT registration in Dubai to remain compliant with local tax laws. VAT registration in Dubai is a mandatory process for businesses whose taxable supplies exceed the mandatory threshold limit set by the FTA. VAT registration services in Dubai can guide businesses through the complexities of VAT registration, helping them meet all legal requirements and ensuring smooth operations under the UAE’s tax regime.
5% STANDARD RATE
The standard rate of 5% VAT in the UAE applies to entertainment, electronics, hotel services, food and beverages, utility bills, private transport services, school uniforms, commercial rent, cars, jewellery and other sectors. Suppliers that produce goods and services within these categories have to register with the FTA and submit a VAT return to the authority at the end of each tax period. This is mandatory for businesses with taxable supplies and imports that exceed AED 375,000 per year. Those with taxable supplies and imports of over AED 187,500 per annum can choose to register for VAT in UAE.
0% RATED SECTORS IN THE UAE
The zero-rated tax applies to VAT taxable supplies, but the rate of VAT applied is 0%. Suppliers that produce goods and services with zero-rated tax must register for a VAT account and file tax returns.
According to Article 45 of the Federal Decree-Law no. (8) of 2017, categories that qualify for zero-rated tax in the UAE include:
- Preventive and basic healthcare services and related goods and services.
- Educational services and related goods and services for nurseries, preschool, school education, and higher educational institutions owned or funded by federal or local government.
- Crude oil and natural gas.
- Buildings converted from non-residential units to residential units through sale or lease.
- Buildings specifically designed to be used by charities through sale or lease.
- Residential buildings within three years of completion, either through sale or lease in whole or in part.
- Investments in precious metals.
- Aircraft or vessels designated for rescue and assistance by air or sea.
- Goods and services related to the transfer of goods or passengers on land, air or sea.
- Exports of goods and services outside the GCC.
VAT EXEMPT SECTORS
UAE’s VAT exemptions apply to supplies that have been declared as ‘exempt’ from additional taxation. Goods and services suppliers that fall under the VAT exempt categories need not register for VAT in the UAE or file tax returns. For example, rents in Dubai for residential units are included in real estate transactions that are exempt from VAT. Here is the complete list of VAT exempt items in the UAE:
- Financial services, including life insurance and reinsurance of life insurance. This also includes financial services that are not conducted for an explicit fee, discount, commission, rebate or similar type of consideration.
- Residential buildings, other than the residential buildings which are specifically zero-rated.
- Bare land.
- Local passenger transport.
Besides these categories, tourists are also exempted from paying VAT. According to the FTA, tourists are eligible to receive 85% of the total VAT amount paid when shopping at any stores located across the UAE.
VAT Registration in UAE
Every business firm needs to register for VAT in UAE under the Federal Decree Law No. (8) of 2017 on Value Added Tax.
VAT Registration can be classified into TWO;
- Mandatory VAT Registration
- A person/ a firm with an annual turnover of AED 375,000 or more in a year should mandatorily do his VAT Registration in UAE
- A person who does not have a place of residence in the UAE and do business in the UAE should register for VAT irrespective of his turnover
- Any person who expected to be exceeded his turnover of more than AED 375,000 in the next thirty days, should also register for VAT
- Voluntary VAT Registration
- A person can choose to do a VAT registration in UAE under the voluntary option for his sales for a previous 12 months period exceeding AED 187,500
- A person who expected to be exceeded his sales of 187,500 in the next thirty days, should consider VAT Registration
- A person whose expense are subjected to tax exceeds 187,500 for a period of the previous 12 months
Documents Required for VAT Registration Processes
- Emirates ID or passport copy to prove the identity
- Certificate of the incorporation of the company
- Trade license copy
- Certificate of articles of association of the company
- Description of business activities
- Certificate of power of attorney of the company
- Supporting documents to show 12 months of sales
- Turnover for the last 12 months in AED
- Expected turnover in the next 30 days
- The estimated value of exports and imports for one year to all GCC countries
- Consent to deal with GCC suppliers or customers
- Supporting documents for customs registration in the Emirates if eligible to apply
- Details of bank account
How to do VAT Registration in UAE?
VAT registration in UAE for new companies should be done online. After the submission of the application, the FTA will review the details and documents which have been provided and approve the application if the requirements are met and will give a Tax Registration Number (TRN). When the registration processes are over, the Ministry of Finance will issue a VAT certificate which is an official confirmation from the authority that the business is registered under the VAT law.
Why should you choose MAATS for your VAT Registration in Dubai, UAE?
VAT registration in Dubai involves a set of procedures. External assistance from experienced professionals is preferable for VAT registration process. At MAATS our experts have trained to fast-track the process and will aid with proper guidance throughout the procedures. We will ensure all rules and guidelines are being followed by doing VAT registration for new companies in UAE. We offer personalised solutions and support to our clients in the VAT registration services at any emirate of UAE. We are well informed regarding the latest norms set by the Federal Tax Authority. We understand the importance and need for VAT Services for every business firm in UAE. You can consult us for various VAT services.
Frequently Asked Questions
Failure to register for VAT when required can result in penalties, fines, and potential legal consequences from the FTA.
VAT registration can take up to 5-10 business days, depending on the completeness of your application and documents.
Yes, foreign companies that conduct taxable activities in Dubai can also register for VAT.
To cancel VAT registration, you need to apply through the FTA portal, and your business must meet the requirements for deregistration.
Yes, businesses can re-register for VAT if their circumstances change and they once again meet the registration requirements.
There is no fee for VAT registration in Dubai. However, businesses must ensure they comply with the FTA’s regulations to avoid penalties.
Yes, you need to update your VAT registration details with the FTA if there are any significant changes in your business activities.
Providing false information can result in penalties, fines, and legal action from the FTA, as well as the cancellation of VAT registration.
If you are exporting goods, they are generally zero-rated, but you still need to register for VAT if your business exceeds the registration threshold.
assist you with the registration process, ensuring all required documentation is submitted correctly and on time.
If your application is rejected, you can review the rejection reason and resubmit the application with the correct details. Consulting an expert may also help address the issue.
After registration, businesses need to submit VAT returns on time, maintain proper records, and ensure they charge and reclaim VAT accurately to comply with the FTA’s requirements.
