VAT registration in Dubai, UAE

VAT or Value-added Tax is a form of indirect tax adopted and practised in 160 world countries. To be more precise, VAT is a taxation system imposed on the consumption of various commodities, products or services. It is a “Consumption tax” and has nothing to with the income of the taxpayer. This taxation system is widely followed in the European Union. VAT came into effect in the UAE and GCC countries in the advent of 2018. The VAT rate followed in the UAE and GCC countries is 5%. Value-added tax as the name suggests, the value of the product or commodity gets added or increased at the different phases of the supply chain. And this value addition takes place from the stage of manufacture to distribution or sales. VAT registration in Dubai, UAE is compulsory for all businesses irrespective of the business domain or size. If you are an entrepreneur planning to expand your business to the Emirates or a business proprietor in the UAE, you are supposed to have a clear understanding of VAT registration in UAE. Kiltons is one of the leading VAT consultants in Dubai, UAE, which provides excellent VAT registration services across the Emirates. We shall go through the various aspects of VAT in connection with the registration, VAT Certificate, VAT Groups etc in a very lucid manner.
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  • VAT registration criteria for businesses

    There are specific criteria applicable for VAT registration in Dubai, UAE. The criteria are based on the revenue generated by the business concern. Businesses can rely on the 3 income generation criteria to decide whether to register the business under VAT or not.

    • Businesses that offer taxable commodities or services with yearly income generation of more than AED 375,000 should register the business under VAT.
    • Businesses that offer taxable commodities or services with yearly income generation less than AED 375,000 but more than AED 187,500, VAT registration is optional. This category comes under voluntary registration.
    • Businesses that offer taxable commodities or services with yearly income generation less than AED 187,500 need not register the business under VAT.
  • How to accomplish VAT registration in Dubai, UAE?

    A business owner in the UAE can easily accomplish the VAT registration process online. Submit the online application form and the entire documents associated with VAT registration on the FTA (Federal Tax Authority) website. The UAE Federal Tax Authority has a fully-equipped website for the purpose of VAT registration. The link to the website is provided here.

    tax.gov.ae

    Kiltons offers seamless VAT registration services in Dubai and across the UAE to ease your registration processes, making it error-free.

  • Documents needed for VAT registration

    Before applying for VAT Registration in Dubai and UAE, you need to keep the below-mentioned documents ready:

    • MOA of the business establishment
    • Owner’s and partner’s Emirates ID (copy)
    • Trade license of the business (copy)
    • Owner’s and partner’s passport (copy)
    • Contact information of the company
    • Category of business and information regarding the activities conducted
    • Information regarding bank account
    • The latest annual income statement 
  • The VAT registration process

    The applicant needs to furnish the following information on the FTA portal for registering the business under VAT.

    • Details regarding the applicant
    • Contact information
    • Information regarding the bank
    • VAT registration details
    • Declaration
    • Verification followed by submission

    The FTA will verify the entire submitted data and documents. If the FTA finds the submitted data acceptable and sufficient, it will proceed towards the final approval of the application. The application approval will lead to the issuance of a Tax Registration Number or TRN. 

  • Benefits of VAT in Dubai, UAE

    Here are some of the most evident benefits of registering the business under the VAT system.

    1. Registering under VAT avoids penalties.
    2. The business entities can formally request for vat reimbursements
    3. VAT offers enhanced business prospects.
    4. VAT enhances the profile of the company. 
    5. When matched with other taxation systems like indirect tax, VAT management is uncomplicated.
    6.  Prevents the occurrences of tax evasion. 
    7. VAT offers improved revenue generation. 
    8. Being a neutral tax, VAT can be levied on all business categories.
  • Drawbacks of VAT
    • The implementation of VAT can be a costly affair as it employs a full billing scheme.
    • VAT has a regressive shade as it affects the spending capacity of the poor. 
    • The business entity should keep the record of all financial transactions and therefore expense related to compliance is more. 
    • Being a multi-stage tax system, VAT is tough to comprehend. 
  • The definition of Tax certificate

    The UAE Ministry of Finance issues the Tax Certificate for the purpose of acquiring tax concessions. And this certificate is issued for multiple entities like private ventures, government bodies and individuals. There are two categories of Tax Certificates issued in the UAE by the Ministry of Finance. And they are:

    1)Value Added Tax Certificate or better known as VAT Certificate

    2)Tax Domicile Certificate

    Value Added Certificate- VAT certificate is issued for the purpose of attaining tax exceptions. This certificate is issued for government bodies, private establishments and the individuals who reside and work in the UAE.

    Tax Domicile Certificate - Also called the Tax Residency Certificate (TRC), the certificate is issued to steer clear of double taxation. The TRC is related only to government bodies, private establishments and the individuals who reside and work in the UAE. The certificate is not applicable to the entities that are excluded in the Double Taxation Avoidance Agreement. 

  • Documents to produce for acquiring a VAT Certificate

    The documentation part varies with the type of entity. Government bodies, private establishments and UAE residents require different sets of documents. Irrespective of the authority, a request letter should be signed by the person or entity concerned as part of the official formality.

    • For government bodies
    • Incorporation Act

      Decree (copy)

      Request letter signed by the designated person

    • For private establishments
    • The trade license (copy)

      Request letter

    • For UAE residents
    • Legal Residence visa of the applicant (copy)

      Passport of the applicant. (copy)

      Request letter

  • What is VAT Group Registration?

    Multiple business entities are allowed to pay a single tax by establishing a group. 2 or more companies may avail the Group VAT registration scheme and thereby attain a single VAT number. The companies that are registered under Group registration are allowed to submit a single financial return.

  • VAT Group requirements

    There are certain requirements each business entity should satisfy in order to establish the VAT group. And they are:

    • The Individual business entity should possess either a Place of Establishment or Fixed Establishment in the Emirates.

    1)Place of Establishment - Place of establishment is the place where the business entity is based in the Emirates under law.

    2)Fixed Establishment – it is the place where a business entity performs the business operations on a daily basis or a permanent basis.

    • The business entities forming the group should have an economic or administrative connection.
    • One or multiple business entities that execute the business in a particular group will have the controlling power over other entities.
  • Advantages of VAT Group registration
    • The greatest advantage of this scheme is that the concerned entities can file their returns as a single entity.
    • Business establishments that are associated economically or structurally or administratively can register under the scheme and pay a single return.
    • Registering under a VAT group makes the accounting-related tasks easier.
    • The concerned business establishments that are part of a group need not file the returns on an individual level. The task can be accomplished in a group perspective. 
    • The group-level supplies that take place within a group are excluded from VAT. But VAT is imposed on all external supplies. 

    Kiltons Business Setup Services provides accounting, bookkeeping, tax, and VAT services besides various business services to a wide range of business establishments in Dubai and UAE. Kiltons VAT consultants in Dubai will assist you in the process of VAT return filing, accomplishing the same in a very feasible and economical manner. Our expertise and experience in ensuring VAT compliance are proved beyond doubt. To begin the process, we request you to get in touch with Kiltons VAT expert.

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