Shuraa Tax Blog

Author: Kajol Kanojia

  • Documents Required for VAT registration in Dubai

    Documents Required for VAT registration in Dubai

    Documents required for VAT registration will be submitted to the Federal Tax Authority (FTA) via a web portal. To obtain the Tax Registration Number (TRN) for the firm, several conditions for VAT registration in the UAE must be met.  

    If a company’s taxable supply and imports surpass the statutory registration level of AED 375,000, it must register for VAT. Furthermore, a company may voluntarily register for VAT if the total amount of its taxable supplies and imports (or taxable costs) exceeds the AED 187,500 voluntary registration threshold.  

    Penalties may apply for non-compliance with the UAE VAT Executive Regulations and law. There is also the risk of a firm losing its legal position and consumer confidence due to noncompliance with regulatory requirements.   

    What is VAT in the UAE? 

    Value Added Tax (VAT) in the UAE is an indirect tax applied to most goods and services at each stage of the supply chain. Simply put, it’s a small percentage added to the price of products or services when they’re sold. Introduced on January 1, 2018, VAT is currently charged at a standard rate of 5%. Businesses collect this tax on behalf of the government and later remit it to the Federal Tax Authority (FTA). 

    VAT plays a crucial role in supporting the UAE’s vision to reduce its reliance on oil revenue and build a sustainable economy. While it may seem like a small addition, VAT helps fund essential public services such as healthcare, education, and infrastructure, ultimately contributing to the country’s long-term growth and stability. VAT in the UAE ensures that everyone contributes a fair share to the nation’s development while maintaining a transparent and balanced tax system. 

    What is VAT Registration? 

    VAT registration is the official process through which a business becomes recognised by the Federal Tax Authority (FTA) as a taxpayer in the UAE. Once registered, the company is authorised to collect VAT from customers on taxable goods and services and remit it to the government. In simpler terms, VAT registration gives a business its Tax Registration Number (TRN), a unique ID used for all VAT-related transactions, invoices, and filings. 

    Businesses in the UAE must register for VAT if their annual taxable turnover exceeds AED 375,000, which is the mandatory registration threshold. However, those with turnover above AED 187,500 but below the required limit can register voluntarily to claim input tax and enhance business credibility. Registering for VAT ensures compliance with UAE tax laws and builds trust with clients and authorities, a key step for any business operating in the country’s evolving financial landscape. 

    Mandatory vs Voluntary VAT Registration in the UAE 

    When it comes to understanding VAT registration requirements in the UAE, it’s essential to know that businesses can either register mandatorily or voluntarily depending on their turnover and taxable activities. Let’s break down the two types and why they matter for your business. 

    1. Mandatory VAT Registration in the UAE 

    If your business is growing rapidly, this part concerns you. Mandatory VAT registration applies when your total taxable supplies and imports in the past 12 months exceed AED 375,000. 

    Alternatively, if you expect your business turnover to cross this threshold within the next 30 days, you must register as well. This rule ensures that all qualifying businesses remain compliant with the VAT registration requirements set by the Federal Tax Authority (FTA) in the UAE. 

    However, it’s important to note that this threshold doesn’t apply to foreign businesses operating in the UAE; they follow different VAT obligations. 

    2. Voluntary VAT Registration in the UAE 

    Not hitting the mandatory limit doesn’t mean you’re out of the VAT system. In fact, smaller businesses can still register voluntarily, and there are good reasons to do so. 

    If your taxable supplies and imports or even taxable expenses over the past 12 months exceed AED 187,500, or if you expect to cross that in the next 30 days, you can apply for voluntary VAT registration. 

    This gives startups and small enterprises a strategic edge by allowing them to claim VAT refunds on business purchases and establish credibility in the market. 

    Why does VAT Registration Matters Businesses in the UAE? 

    Whether your registration is mandatory or voluntary, completing your VAT registration is not just about compliance; it’s about building business credibility. 

    Here’s why it’s so important: 

    • It ensures your business complies with the UAE’s tax laws. 
    • You can reclaim VAT paid on business expenses, reducing operational costs. 
    • Being VAT-registered boosts your company’s image, showing you operate transparently and professionally. 
    • It allows seamless transactions with other VAT-registered companies in the UAE. 

    Ignoring VAT registration can be costly. Businesses that fail to register or file VAT returns face a fine of AED 10,000, plus AED 1,000 per tax period for missed returns. Additionally, non-registered companies lose input tax credits, directly affecting their profits. 

    Documents Required for VAT Registration in the UAE 

    Businesses must complete the required documentation to register for VAT in the UAE. VAT registration and fee payment (for paid services) will be completed online. The documents listed below are necessary for VAT registration in the UAE.  

    • Business Trade License or Commercial License   
    • Passport copies of the owner or partners of the company mentioned on the license 
    • Emirates ID of the owners/ partners of companies (as per the business license)  
    • Memorandum of Association (MOA)  
    • Complete Company Address  
    • Authorised Signatory’s Contact with email, number  
    • Company Bank Details, including IBAN letter 
    • Details of branch (if any)  
    • Turnover Declaration (Signed & Stamped by the owner or the manager)  
    • Amount of the expected revenue, turnover, and taxable expense for the next 30 days   
    • To specify if the Company does GCC export or import   
    • Provide the custom code along with a copy of the Dubai Customs letter (if any) 
    • Specify if your company would like to be registered as a tax group   
    • As per the Federal Tax Authority, you may also require additional documents or authorisation depending on your business activity, the jurisdiction of your business and other such factors.  

    What is the Timeline for VAT Registration? 

    The materials will be submitted electronically. Upon completing online VAT registration, you will receive your Tax Registration Number (TRN) from the Federal Tax Authority (FTA). The Processing time is 20 business working days from the date of sharing complete information with FTA. The application may take longer if additional details are required.   

    What is the Significance of VAT Registration in Dubai?   

    Paying taxes is viewed by some business owners as an expense. They have no idea that registering their businesses for VAT might bring several benefits.   

    • It raises the company’s profile. Companies may, of course, show their VAT registration to key stakeholders and business associates, thereby enhancing their credibility and customer preference. Customers are more inclined to prefer a company that has registered for VAT than one that does not.   
    • Tax avoidance is sometimes considered a crime, and if found guilty, the corporation may face severe financial penalties in case of non-compliance or delayed compliance. Registering your business for VAT in Dubai avoids these situations and ensures your firm grows while also benefiting society. 
    • It should be underlined that VAT is not intended to burden enterprises. VAT refunds are available in certain instances. 
    • Overall, it helps the company capture a broader market and boost its reputation, thereby expanding its client base.  

    Required Documents for Tax Group Registration  

    Businesses in the UAE can make a tax group registration application. Several enterprises of various types can also form a tax group. According to the Federal Tax Authority (FTA), if entities are related to parties with a common ownership of 50% or more, then all those companies can be combined into one tax group. The FTA will issue a single TRN for the entire group of companies. Group structure, no objection letter, and turnover declaration need to be submitted.  

    How do I register for VAT in Dubai?  

    Online registration for VAT is available. To register for VAT, individuals or businesses must first create an account on the Federal Tax Authority (FTA) website.  

    Several official documents are needed for VAT registration. Before submitting a VAT registration application to the FTA, a few crucial documents must be attached to the application. After the Tax Registration Number (TRN) has been approved, a VAT Certificate will be issued. A distinctive, specific Tax Registration Number (TRN) will be assigned to each VAT certificate.  

    How to Register a Tax Group in the UAE? 

    Only the group’s representative company may apply for tax group registration. A representative firm of the group must apply for VAT registration. Each potential member of the Tax Group is required to:  

    • Being a person of law (not a natural person)  
    • Be a UAE resident who is not a part of another Tax Group.  
    • Must have a place of establishment or a fixed establishment in the UAE  
    • Must be a related party of the group members and the representative  
    • One or more persons conducting business in a partnership must control the others  

    How to Register for a Tax Registration Number in the UAE? 

    If you’re running a business in the UAE, one of the first steps after understanding VAT is getting your Tax Registration Number (TRN). This number is issued by the Federal Tax Authority (FTA) and acts like your business’s unique tax identity; it’s what officially makes your company recognized for VAT purposes. 

    Getting a TRN might sound complicated, but the process is actually straightforward if you know what to expect. Here’s a simple, step-by-step guide to help you through it: 

    Step 1: Create an FTA e-Services Account 

    Start by visiting the Federal Tax Authority’s official website — https://tax.gov.ae. 
    Click on “Sign Up” to create your e-Services account. You’ll need to provide basic details like your email address and set a password. Once you confirm your email, you can log in and start your tax registration journey. 

    Step 2: Begin Your VAT Registration Application 

    After logging in, head to the “VAT Registration” section. This is where you’ll fill out the form to apply for your TRN. Make sure you have all your business details ready, including: 

    • Your trade license number and copy 
    • Owner’s Emirates ID or passport copy (for non-residents) 
    • Contact details (email, phone, address) 
    • Bank account details 
    • Financial records showing your turnover 

    These details help the FTA verify your eligibility for VAT registration. 

    Step 3: Fill Out the VAT Application Form 

    Now comes the main part, completing the VAT registration form. The form will ask for information about your business structure (LLC, sole establishment, etc.), business activities, and financial data. You’ll also need to specify whether your registration is mandatory or voluntary, based on your annual taxable supplies. 

    Note: Be careful here; any incorrect information could delay your TRN approval. 

    Step 4: Submit the Application 

    Once you’ve filled everything out and attached all required documents, review the form carefully. After double-checking, click “Submit for Approval.” 

    The FTA will then review your application, which can take anywhere between 5 to 20 working days, depending on the accuracy of your submission and current processing times. 

    Step 5: Receive Your TRN Certificate 

    If your application is approved, you’ll receive your Tax Registration Number (TRN) via email. You can also download your VAT Certificate from your FTA account. 

    Your TRN will be a 15-digit number; this is what you’ll need to include on your invoices, tax returns, and official documents related to VAT. 

    Why Shuraa tax?  

    Businesses must create an online account on the FTA website and complete the VAT registration form to register for VAT in the UAE. The documents mentioned above can be uploaded, and the procedure can be completed while registering for VAT on the website. Contact Shuraa Tax Consultants if you are confused about how to proceed or if you have any questions concerning the paperwork necessary for VAT registration in Dubai.  

    Shuraa Tax Consultants provides a complete solution for UAE VAT registration services, including the documentation required for VAT registration in Dubai and throughout the UAE, as well as assistance with the online registration process. Our tax consultants guarantee that the VAT registration procedure is simple. We provide comprehensive counselling in terms of FTA VAT registration online, tax accounting services, financial record keeping, bookkeeping services, corporate taxation, and so forth. Contact Shuraa Tax Consultants right away for UAE VAT implementation! All you need to do is reach out to us at:

    📞 Call: +(971) 44081900
    💬 WhatsApp: +(971) 508912062
    📧 Email: info@shuraatax.com

  • Voluntary VAT Registration in Dubai, UAE

    Voluntary VAT Registration in Dubai, UAE

    Every business entity in the United Arab Emirates (UAE) is not required to register for VAT. While some companies are compelled by the Federal Tax Authority to register for VAT, small firms, independent contractors, and freelancers that have not yet reached the statutory VAT registration threshold may choose not to do so. We’ll examine in detail the elements of voluntary VAT registration in Dubai that businesses should be aware of in this post. 

    What is Voluntary VAT Registration? 

    Voluntary VAT registration means a business chooses to register for VAT even if it’s not required by law. Generally, only businesses that earn more than a certain amount are required by law to register. But if your sales are below that level, you can still choose to register. Many small businesses do this because it makes them look more professional, helps them work with bigger companies, and lets them claim back the VAT they pay on things like rent, equipment, or supplies. It’s basically an optional step that can give your business some extra benefits before VAT registration becomes mandatory. 

    Voluntary VAT Registration in the UAE 

    In the UAE, the Federal Tax Authority (FTA) allows VAT voluntary registration UAE for businesses with taxable supplies or expenses exceeding AED 187,500 in the past 12 months or expected to exceed this amount in the next 30 days. This threshold is lower than the mandatory registration threshold of AED 375,000, giving small and growing businesses the option to register early. 

    In short, voluntary VAT registration is an optional but strategic move for small businesses in the UAE that want to stay compliant, claim input VAT, and build a professional reputation before hitting the mandatory VAT registration limit.  

    Who Can Opt for Voluntary VAT Registration in the UAE? 

    To apply for voluntary VAT registration UAE, your business must meet the conditions outlined by the Federal Tax Authority (FTA). This option is designed for small companies and startups that are not yet required to register but want the benefits of being VAT-registered. 

    • Turnover between AED 187,500 and AED 375,000: If your annual taxable supplies fall within this range, you can register voluntarily rather than wait for mandatory registration. 
    • Past or future threshold trigger: You’re eligible if you crossed AED 187,500 in the past 12 months or you expect to reach it within the next 30 days. 
    • Startups with high expenses: Even if your business has no sales revenue yet, you can register if your taxable expenses exceed AED 187,500. This enables you to recover input VAT on costs incurred during your setup phase. 

    In essence, voluntary VAT registration UAE allows growing companies to claim tax benefits early, establish compliance, and position themselves for smooth expansion before hitting the mandatory VAT threshold. 

    Documents for Voluntary VAT Registration in the UAE 

    If you’re planning to register for VAT in the UAE voluntarily, here’s a basic of the required documents, based on the official guidelines from the Federal Tax Authority (FTA) and reputable sources: 

    • Valid trade license(s) 
    • Passport and Emirates ID of the authorised signatory(s) 
    • Proof of authorisation for the signatory(s) 
    • Contact information (e.g., business email, phone, and address) 
    • Bank letter confirming bank account details 

    What is the Process of Voluntary VAT Registration in UAE? 

    Voluntary VAT registration in the UAE is available to businesses that do not meet the mandatory threshold but wish to register for VAT to claim input tax or enhance business credibility. Here’s a clear step-by-step guide to understanding how it works: 

    Step 1: Check the Voluntary VAT Registration Threshold UAE 

    Verify if your taxable turnover or taxable expenses exceed AED 187,500 in the last 12 months or are expected to exceed this limit in the next 30 days. This threshold is lower than the mandatory VAT registration threshold of AED 375,000. 

    Step 2: Prepare Required Documents 

    Gather the documents typically required for VAT voluntary registration UAE, such as: 

    • Valid trade license 
    • Passport and Emirates ID copies of owners/partners 
    • Proof of business activities (contracts, invoices, purchase orders) 
    • Financial statements or expense records showing eligibility 

    Step 3: Create an e-Services Account on the FTA Portal 

    Register on the Federal Tax Authority (FTA) e-Services portal. You’ll need to create a user account before applying for voluntary registration for VAT UAE. 

    Step 4: Submit the Voluntary VAT Registration Application 

    Log in to your FTA account and complete the online VAT registration form by: 

    • Providing business details and activity descriptions 
    • Uploading supporting documents 
    • Indicating turnover or expenses to justify voluntary VAT registration 

    Step 5: Await FTA Review and Approval 

    The FTA will review your application to confirm that you meet the voluntary VAT registration threshold in the UAE. If approved, you’ll receive a VAT Registration Certificate containing your Tax Registration Number (TRN). 

    Step 6: Start VAT Compliance 

    Once registered, your business must: 

    • Charge VAT on taxable supplies 
    • File VAT returns periodically 
    • Maintain proper accounting records to stay compliant with UAE VAT laws 

    Key Advantages of Voluntary VAT Registration 

    Below are the key benefits of voluntary VAT registration in the UAE 

    1. Input VAT Recovery & Potential Refunds 

    You can reclaim VAT paid on business purchases known as input VAT, which improves cash flow and reduces operational costs. If the input VAT exceeds the VAT on sales, you may receive a refund.  

    2. Boosts Business Credibility & Reputation 

    Being VAT-registered signals transparency and compliance, enhancing your image among customers, suppliers, investors, and partners. It positions you as a reliable and professional enterprise. 

    3. Competitive Edge & Market Access 

    VAT registration can make your business more attractive, especially to clients or government entities that prefer VAT-compliant suppliers. It can also help you bid for contracts that require VAT credentials.  

    4. Prepares Your Business for Growth 

    Voluntary registration equips you for smooth compliance once your turnover surpasses the mandatory threshold. It ensures you’re already structured for future scalability.  

    5. Improved Financial Discipline & Record-Keeping 

    VAT registration necessitates accurate bookkeeping and regular VAT return filings, which in turn advances better financial management and transparency. 

    6. Easier International Trade 

    If you export goods or services, VAT-registered businesses can benefit from zero-rating exports and reclaim VAT on imports, streamlining cross-border trade. 

    7. Avoid Penalties & Risks 

    Delaying registration may lead to hefty fines if you unexpectedly exceed the threshold. Voluntary registration helps you stay ahead and avoid such penalties. 

    8; Access to Government & Large Corporate Contracts 

    Many tenders favour businesses that are VAT-registered. Being compliant widens your opportunities in government and corporate procurement. 

    Responsibilities of Registering a Business for VAT Free in the UAE  

    If you have applied for optional VAT registration in the UAE and are accepted, you will assume the obligations of entities that have applied for mandatory VAT registration. In essence, this means that you will:  

    • Submit VAT returns  
    • File refunds for VAT (if any)  
    • Maintain records and accounts for all VAT transactions.  
    • Pay the FTA-required VAT liability on time  
    • Charge VAT in invoices as per the applicable VAT rate  
    • Comply with the demands of VAT-registered enterprises.  

    If your company has registered for VAT, you must abide by the duty to keep VAT records and submit them to the appropriate authorities.   

    Drawbacks of Voluntary Registering for VAT in Dubai  

    The price of the goods or services you supply may appear more expensive to the end user as a result of VAT charges in the invoice.   

    The fact that VAT-registered entities, also known as taxable entities, assume additional duties such as the ones listed above, is a significant drawback to voluntary VAT registration. This entails keeping all relevant VAT records, submitting VAT reports to the UAE FTA, and retaining all VAT receipts and invoices. You need to comply with in terms of administration and bookkeeping.  

    Exemption from VAT Registration 

    Businesses are not permitted to register under UAE VAT if the value of their supplies and imports is less than the voluntary registration level of AED 187,500. Additionally, companies that only produce zero-rated supplies are eligible for VAT registration exceptions.  

    VAT Registration Experts in Dubai 

    Having a partner to help you manage VAT is crucial if you’re considering registering for VAT, either legally or voluntarily.   

    It is pretty simple to register with VAT Registration UAE and to comply with all applicable laws and regulations. Even the filing of VAT returns and the accounting and bookkeeping for VAT are assisted by our experts. With decades of experience in the field and a group of knowledgeable, licensed tax agents in Dubai, you can be sure that you are working with dependable experts.   

    Are you considering seeking professional assistance?

    📞 Call: +(971) 44081900
    💬 WhatsApp: +(971) 508912062
    📧 Email: info@shuraatax.com

    FAQs 

    Q1. Is VAT registration mandatory in the UAE? 

    VAT registration in the UAE becomes mandatory if your annual taxable turnover exceeds AED 375,000. Businesses below this limit can opt for voluntary VAT registration if their taxable supplies or expenses exceed the voluntary VAT registration threshold in UAE (AED 187,500). Voluntary registration for VAT UAE is beneficial for startups and SMEs to recover input VAT and enhance credibility with suppliers and clients. 

    Q2. Do zero-rated supplies count towards the VAT threshold? 

    Yes. Even if your business makes zero-rated supplies, their value is included when calculating your VAT registration threshold. If your taxable turnover (including zero-rated goods or services) exceeds AED 375,000, VAT registration becomes mandatory. If your turnover is between AED 187,500 and AED 375,000, you may apply for VAT voluntary registration UAE to reclaim input VAT. 

    Q3. Can I claim back all the VAT paid by my business? 

    You can reclaim VAT paid on business expenses, provided they are used to make taxable supplies (standard or zero-rated). However, VAT on certain expenses like entertainment, personal use items, or motor vehicles used for personal purposes cannot be reclaimed. Voluntary VAT registration UAE allows businesses below the mandatory threshold to recover eligible input VAT before crossing the higher turnover limit. 

    Q4. Can I cancel my VAT registration in the UAE? 

    Yes. VAT deregistration is permitted if: 

    Your business ceases making taxable supplies, or 

    • Your annual turnover falls below the voluntary VAT registration threshold in the UAE (AED 187,500). 
    • The deregistration process must be completed through the FTA (Federal Tax Authority) portal. Late deregistration may attract penalties. 

    Q5. What are taxable supplies as per the UAE VAT Law? 

    Taxable supplies include all goods and services made in the UAE that are subject to VAT at either 5% (standard-rated) or 0% (zero-rated). These include: 

    • Sales of goods and services within the UAE 
    • Imports of goods or services 
    • Specific zero-rated sectors, such as exports, healthcare, and education 

    Businesses engaged in taxable supplies should evaluate whether they meet the VAT voluntary registration UAE criteria if they have not yet crossed the mandatory threshold. 

    Q6. What is the voluntary VAT registration threshold UAE? 

    The voluntary VAT registration threshold UAE is AED 187,500. Suppose your taxable turnover or taxable expenses exceed this limit but are below the mandatory threshold of AED 375,000. In that case, you may apply for voluntary registration for VAT UAE to recover input VAT and improve compliance. 

    Q7. How long does it take to get VAT registered in the UAE? 

    Typically, VAT registration through the FTA portal takes around 20 business days, provided all documents are in order. Incomplete or incorrect information may delay approval. 

    Q8. What documents are required for voluntary VAT registration UAE? 

    Common documents include: 

    • Trade license 
    • Passport and Emirates ID of owners/partners 
    • Proof of taxable turnover or projected income 
    • Financial statements or invoices 
    • Bank account details 

    Q9. What happens if I fail to register for VAT on time? 

    Failure to register within the FTA deadline may result in administrative penalties of AED 10,000 or more. Businesses are advised to assess their VAT voluntary registration UAE eligibility early to avoid non-compliance.