Shuraa Tax Blog

Category: VAT Registration

  • How to Cancel VAT Registration in UAE?

    How to Cancel VAT Registration in UAE?

    If you’re a business owner in the UAE, you might reach a stage where staying VAT-registered is no longer necessary. Maybe your company’s revenue has fallen below the mandatory threshold, or perhaps you’ve stopped making taxable supplies altogether. In such cases, understanding how to cancel VAT registration in UAE becomes crucial.

    VAT cancelation, also referred to as how to deregister from VAT UAE, is not just about closing a tax account; it’s about ensuring your business remains fully compliant with the Federal Tax Authority (FTA) rules. The process involves submitting the correct application, settling any outstanding liabilities, and ensuring your tax returns are up to date. While it might sound complex at first, it’s actually a straightforward and manageable process when broken down step by step.

    In this guide, we’ll cover everything you need to know about VAT deregistration in the UAE, from eligibility conditions to the application process, timelines, and important points to watch out for, so you can smoothly handle your VAT exit without any penalties.

    When Should You Cancel Your VAT Registration in the UAE?

    Knowing when to cancel your VAT registration in the UAE is crucial for staying compliant and avoiding unnecessary penalties. VAT cancelation isn’t just paperwork; it reflects that your business no longer meets the conditions for VAT or chooses to step back voluntarily.

    You must apply for VAT deregistration in the UAE under these circumstances (as per Article 21 of the VAT Law):

    • Business activities have stopped: If your company has completely stopped supplying taxable goods or services, it’s time to deregister.
    • Turnover falls below the threshold: If your business turnover in the past 12 months was less than AED 187,500 and you do not expect it to exceed this threshold in the next 30 days, cancelation becomes necessary.

    In these cases, deregistering is mandatory.

    Voluntary VAT Deregistration

    Sometimes, businesses can choose to deregister even if it’s not strictly required. According to Article 22, a business may voluntarily apply for VAT deregistration if:

    • Taxable supplies in the previous 12 months were less than AED 375,000.

    However, Article 23 adds an important rule: a business that initially registered voluntarily cannot deregister within the first 12 months of registration.

    What is the Eligibility to Cancel VAT in the UAE?

    VAT cancelation in the UAE is a formal process that allows a business to cancel its VAT registration when it no longer meets the criteria for being a taxable person. Understanding VAT deregistration rules is essential to ensure compliance and avoid penalties.

    A business or individual can apply for VAT deregistration in the UAE under the following conditions:

    1. Business Stops Taxable Supplies: If your business ceases to provide goods or services subject to VAT, you are eligible to deregister. This includes firms that close operations entirely or pivot to activities not subject to VAT.
    2. Annual Revenue Falls Below Threshold: Businesses whose taxable supplies (and imports) fall below the mandatory VAT registration threshold, currently AED 187,500, may apply for voluntary cancelation.
    3. Temporary Suspension of Business Activities: If your business temporarily halts all taxable activities for more than six months, you may request VAT cancelation.
    4. Non-Trading Entities: Companies that were registered for VAT but never commenced trading can apply for deregistration immediately.
    5. Changes in Business Structure: If your company merges, dissolves, or is liquidated, it becomes eligible to cancel its VAT registration.

    It’s essential to comply with the VAT deregistration rules established by the Federal Tax Authority (FTA) to avoid fines or legal consequences. Businesses must submit accurate records of all taxable supplies and ensure that all outstanding VAT is paid before approval for deregistration is granted.

    Documents Required for VAT Cancelation in UAE

    If you’re planning to cancel your VAT registration in the UAE, it’s essential to understand the VAT deregistration rules and ensure all necessary documents are ready.

    The Federal Tax Authority (FTA) requires specific paperwork to process your request efficiently. Here’s a comprehensive guide to the documents required for VAT deregistration in UAE:

    • Most recent financial statements & turnover template
    • Copy of revoked trade or business license
    • Board resolution authorising VAT deregistration
    • Letter of liquidation (if closing)
    • Evidence suggests that business operations have ceased
    • Updated HR records & Ministry of Labour letter on employees
    • Sample invoices & letters confirming chargeable expenses
    • Previous and updated sales agreements or licenses
    • TRNs, correspondence mentioning TRNs, and Head Office Business Certificate
    • Diagram of business operations (suppliers, customers, countries)
    • Outline of suppliers, importers, and partners
    • Modified business setup agreement (if applicable)
    • Sealed letter confirming non-operation in the UAE (if required)

    By preparing these documents in advance, you ensure a smooth process when applying for VAT deregistration. Following the VAT deregistration requirements in UAE carefully helps avoid delays and ensures compliance with local tax laws.

    How to Cancel VAT Registration in UAE?

    Following VAT deregistration rules, here’s how you can deregister VAT in UAE step by step:

    Step 1: Log in to Your EmaraTax Account

    The first step is to access your EmaraTax account, which is the UAE’s official tax portal.

    • Use your registered username and password or log in using UAE PASS.
    • If two-factor authentication is enabled, you’ll receive a One-Time Password (OTP) via your email or mobile. Enter it to proceed.
    • New users: Click Sign Up to create an account and link to your business.

    Tip: Ensure your account details are up to date, including your email address and mobile number, as all VAT deregistration communications will be sent to this address.

    Step 2: Select Your Company Profile

    Once logged in, you’ll see a dashboard with a list of Taxable Persons linked to your account.

    • Select the company for which you want to cancel VAT registration and click ‘View’.
    • If your company isn’t listed, you’ll need to create a Taxable Person in EmaraTax by entering your company details, trade license, and VAT registration number.

    This step ensures you are deregistering the correct entity and prevents errors in the application.

    Step 3: Initiate VAT Deregistration Application

    Now it’s time to officially start the process of deregistering from VAT in the UAE:

    • On the company’s VAT dashboard, click Actions on the VAT tile.
    • Select Deregister to open the VAT deregistration form.

    Tip: This form is the central application where all your details, documents, and reasons for deregistration will be captured.

    Step 4: Update or Review Your Business Information

    Before submitting the deregistration application:

    • Click “Edit/Review” if you need to update details such as bank account, contact information, or company address.
    • Ensure that all essential documents, such as financial statements, are prepared.
    • Click ‘Proceed to De-Registration’ and then ‘Start’ to initiate the formal process.

    Note: If your business is registered under the Tourist Refund System (TRS), your VAT deregistration won’t be finalised until TRS deregistration is completed.

    Step 5: Provide Required Information and Upload Documents

    You will now need to fill in all necessary information and submit supporting documents.

    • Fill every mandatory field accurately to avoid rejections.
    • Upload documents in accepted formats, such as PDF or Excel.
    • Select the reason for deregistration: e.g., business closure, suspension of taxable activities, or turnover below the VAT threshold.
    • Depending on your selected reason, the system will display additional fields to capture specific details.

    Tip: Keep scanned copies of all documents ready before starting this step, as it saves a significant amount of time.

    Step 6: Specify Eligible Deregistration Date

    Next, you’ll enter the date from which your business becomes eligible for VAT deregistration.

    • Automatic date: EmaraTax often calculates this based on your business records.
    • Custom date: If you have a specific reason, you can request a different effective date.

    Important: This date determines your VAT liability period, so make sure it is accurate.

    Step 7: Enter Taxable Supplies and Expenses

    To support your deregistration, you must provide evidence of taxable supplies and expenses:

    • Use the Excel sheet provided in the system to record figures.
    • All amounts must be in AED (UAE Dirhams).
    • After completing the sheet, click Next Step to go to the Authorised Signatory section.

    Tip: Double-check your numbers, as errors in taxable supplies or expenses can cause delays in approval.

    Step 8: Verify Authorised Signatory

    This step ensures that the person applying is authorised:

    • Check the details of the Authorised Signatory listed in the system.
    • You can handle back and forth using the Previous and Next buttons to review details.
    • Confirm the signature, name, and designation.

    Tip: Only an authorised signatory can finalise the deregistration application.

    Step 9: Review and Submit the Application

    Finally, go through the entire application before submitting:

    • Review every detail, including personal information, business details, taxable supplies, and uploaded documents.
    • Once confirmed, click Submit.
    • After submission, EmaraTax will process your deregistration, and you will receive confirmation once it has been approved.

    Tip: Keep a copy of the submitted application and acknowledgement for your records.

    By following these steps carefully, you can complete the VAT deregistration process in the UAE smoothly while complying with the relevant VAT deregistration rules.

    Common Mistakes During VAT Deregistration in UAE

    Deregistering VAT in the UAE can seem straightforward, but businesses often stumble due to misunderstandings or oversights. Here are some of the most common mistakes:

    1. Applying Before Meeting Eligibility Criteria

    Many businesses attempt to deregister before meeting the requirements outlined by the Federal Tax Authority (FTA), such as having taxable supplies below the mandatory threshold or ceasing business operations altogether. Failing to meet these criteria may result in the rejection of your application.

    2. Incomplete or Incorrect Documentation

    Submitting documents with missing information, such as revoked trade licenses, financial statements, or employee details, can cause delays in the process. It’s essential to ensure all required documents are accurate, updated, and aligned with FTA guidelines.

    3. Neglecting Outstanding VAT Payments

    Some businesses overlook pending VAT liabilities or unfiled returns before applying for deregistration. Any unpaid VAT must be settled to avoid fines or rejection of the deregistration request.

    4. Incorrect Reporting of Supplies

    Errors in reporting taxable, zero-rated, or exempt supplies can lead to discrepancies. Accurate records of turnover and VAT transactions are crucial when deregistering.

    5. Failure to Update Business Records

    Failing to reflect changes in HR records, contracts, or financial agreements may create inconsistencies that raise red flags during FTA review.

    6. Ignoring VAT Deregistration Deadlines

    Businesses must apply for deregistration within a specified period after becoming eligible. Missing this window can result in penalties or continued VAT obligations.

    7. Not Using the Emara Tax Portal Properly

    Attempting deregistration outside the official online portal or not following the correct steps in the Emara Tax Account can lead to delays or rejected applications.

    8. Assuming Deregistration Cancels All Liabilities

    Some businesses mistakenly believe VAT deregistration eliminates all past liabilities. Any prior obligations or audits remain enforceable.

    Smoothly Handle Your VAT Exit with Shuraa Tax!

    Understanding how to cancel VAT registration in UAE may seem overwhelming at first, but with the proper guidance, it becomes a straightforward process. By following the VAT cancelation rules, meeting the eligibility criteria, and preparing all the necessary documents for VAT deregistration in the UAE, you can ensure a smooth exit without incurring penalties.

    Remember, whether you’re figuring out how to deregister for VAT in the UAE, learning how to deregister from VAT in the UAE, or handling the process of deregistering VAT in the UAE, staying compliant is key. Carefully following the VAT deregistration requirements in the UAE, from logging into your EmaraTax account to submitting accurate financial records, will save you time, stress, and unnecessary fines.

    For expert assistance and to make sure your deregistration process is handled seamlessly, turn to Shuraa Tax. Their team can guide you through every step and ensure your VAT exit is fully compliant with the Federal Tax Authority.

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

    Frequently Asked Questions

    1. What is the timeline for VAT deregistration approval in the UAE?

    After submitting your deregistration application on EmaraTax, the Federal Tax Authority (FTA) typically takes 20 business days to review and respond. However, this can vary based on:

    • The accuracy of your application and documents.
    • Whether you have outstanding liabilities or returns.
    • The need for any additional clarification or audits.

    It’s recommended to track your application status regularly and respond promptly to FTA requests.

    2. When is a business required to cancel VAT registration in the UAE?

    A business is mandated to cancel its VAT registration if it no longer meets the conditions set by the Federal Tax Authority (FTA). This includes situations where:

    • The business stops making taxable supplies, or
    • Its taxable turnover falls below AED 187,500 over the past 12 months and is not expected to exceed that amount in the next 30 days.

    3. Can a business apply for voluntary VAT deregistration in the UAE?

    Yes, a business may apply for voluntary deregistration if its taxable supplies over the past 12 months are less than AED 375,000. However, if the business registered voluntarily in the first place, it cannot deregister within the initial 12 months of registration, as per Article 23 of the UAE VAT Law.

    4. Can a business re-register for VAT in the future?

    Yes. If a deregistered business later meets the VAT registration threshold (currently AED 375,000 for mandatory registration), it may apply to re-register with the FTA through EmaraTax. It is important to note that previous non-compliance may impact the approval process.

    5. Is a final VAT return required before deregistration is approved?

    Yes. Before a deregistration request can be processed, the business must:

    • File all pending VAT returns
    • Submit a final VAT return up to the deregistration date
    • Pay any outstanding VAT liabilities

    The FTA will only approve the cancellation once the business is fully compliant and all obligations have been fulfilled.

  • Business Activity Description For VAT Registration

    Business Activity Description For VAT Registration

    When registering for VAT in the UAE, one of the most critical elements that business owners often overlook is the business activity description for VAT registration. Whether you’re launching a startup or expanding an existing company, clearly identifying your Business Activity for VAT Registration can make the difference between smooth approval and frustrating delays.

    But what exactly qualifies as a business activity? And how does the distinction between Business vs. Non-Business Activities affect your VAT obligations? In this blog, we’ll break down the essentials of selecting the correct business activity description, explain why it matters for compliance with the Federal Tax Authority (FTA), and provide guidance on how to avoid common pitfalls that could trigger red flags during registration.

    What is VAT Registration in the UAE?

    Value Added Tax (VAT) registration in the UAE is a mandatory process for businesses that meet specific revenue thresholds set by the Federal Tax Authority (FTA). VAT, introduced in the UAE on January 1, 2018, is a consumption tax levied at a rate of 5% on most goods and services.

    Businesses must register for VAT if their taxable supplies and imports exceed AED 375,000 annually. Those with revenues between AED 187,500 and AED 375,000 can register voluntarily.

    Understanding Business Activity for VAT Registration

    The business activity for VAT registration plays a critical role in determining a company’s eligibility and requirements for VAT compliance. When registering, a business must specify its core activities, such as trading, manufacturing, consultancy, or service provision. The Federal Tax Authority uses this information to assess whether the business qualifies for VAT registration and to categorise it correctly within the VAT framework.

    For example, a company involved in commercial trading or import-export operations typically reaches the VAT threshold faster due to higher transaction volumes. On the other hand, freelancers or service-based professionals may fall below the mandatory threshold but still opt for voluntary VAT registration to boost credibility and reclaim input VAT on expenses.

    Key Benefits of VAT Registration in the UAE:

    • Legitimacy and Compliance: Ensures your business is legally compliant and avoids fines.
    • Input Tax Recovery: Allows recovery of VAT paid on business purchases and expenses.
    • Improved Business Image: Builds trust with suppliers, customers, and partners.
    • Access to Larger Contracts: Many government or corporate tenders require suppliers to be VAT-registered.

    VAT registration is not just a regulatory requirement but also a strategic move to grow your business in the UAE. Clearly defining your business activity for VAT registration is essential to ensure compliance, optimise tax recovery, and maintain a professional standing in the market.

    Whether you’re starting a new venture or scaling an existing one, understanding your obligations under the UAE VAT law is crucial for sustainable growth.

    Business Activity Description for VAT Registration in the UAE

    When registering for VAT in the UAE, one of the most critical elements is accurately defining your business activity description for VAT registration. This ensures that your application complies with the Federal Tax Authority (FTA) requirements, avoiding delays or rejections.

    Why the Business Activity Description Matters

    The business activity description for VAT registration provides the FTA with a clear understanding of what your company does. It helps them determine:

    • Whether your business meets the VAT registration threshold
    • The appropriate VAT treatment for your products or services
    • The classification and industry your business falls under

    An unclear or incorrect description can result in processing delays, additional queries, or even penalties.

    What to Include in a Business Activity Description for VAT Registration

    To complete the business activity section of your VAT registration accurately, include the following key details:

    1. Precise Nature of the Business

    Clearly describe the primary services or products your business provides. Be specific — avoid generic terms like “trading” or “services.” For example:

    • Instead of: “Retail”
      Use: “Retail sale of electronics including mobile phones, laptops, and accessories.”

    2. Operational Activities

    Explain what your company does on a day-to-day basis. This may include:

    • Manufacturing, importing, or exporting products
    • Providing consulting, maintenance, or installation services
    • Offering digital services like software, marketing, or design

    3. Sector and Industry Classification

    Mention the sector your business operates in. This helps the FTA categorise your business appropriately. Examples include:

    • Food & Beverage
    • Healthcare
    • Information Technology
    • Construction
    • Logistics

    4. Geographical Scope of Operations

    Indicate whether your business operates:

    • Only within the UAE
    • Across GCC countries
    • Internationally

    5. Licensing Information

    Make sure your business activity description aligns with your trade license issued by the Department of Economic Development (DED) or other free zone authorities. If there’s a mismatch, your VAT application may be flagged for review.

    Tips for Writing a Clear Business Activity Description for VAT Registration

    • Be specific and detailed: Describe actual business operations in full.
    • Avoid abbreviations or internal jargon.
    • Align your description with your trade license.
    • Use keywords relevant to your industry.
    • Keep it professional and factual — no marketing language.

    Sample Business Activity Descriptions

    Here are a few examples of properly written business activity descriptions for VAT registration:

    • “Wholesale and retail trading of construction materials, including cement, steel, and fittings, within the UAE and GCC markets.”
    • “Providing digital marketing services including SEO, PPC advertising, and social media management for clients globally.”
    • “Manufacturing and exporting custom furniture for residential and commercial clients in the UAE and abroad.”

    An accurate and well-crafted business activity description is crucial for a smooth and successful VAT registration process in the UAE. It helps ensure compliance with the FTA and avoids unnecessary delays or audits. When in doubt, consult with a Shuraa tax advisor to help you formulate a precise description.

    Why an accurate Business Activity Description matters for VAT Registration

    Your business activity description for VAT registration is not just a formality—it determines how the FTA classifies your operations. This classification affects:

    • Whether you’re eligible for VAT registration (mandatory or voluntary)
    • Whether you can reclaim input tax
    • Whether you’re subject to special schemes (e.g., reverse charge)
    • How your VAT returns are reviewed and audited

    An unclear or inaccurate business description can lead to misclassification, delayed approval, or rejection of your application.

    How to Properly Specify Your Business Activity in a VAT Registration Application

    When filling out the VAT registration form on the EmaraTax portal, you will need to provide a clear and concise business activity for VAT registration in the “Business Description” field.

    Here’s how to do it correctly:

    Step 1: Be Specific and Relevant

    • Clearly state the exact nature of your primary business activity.
    • Example: Instead of saying “trading,” write “import and wholesale of mobile electronics.”

    Step 2: Use Industry-Recognised Terms

    • Align your description with the UAE economic activity classification (e.g., the DED business activity list).
    • This helps the FTA quickly understand your business scope.

    Step 3: Include Multiple Activities If Applicable

    • If you have several operations, list them in order of importance (primary, secondary).
    • Example: “Retail sale of apparel (primary), online clothing marketplace (secondary).”

    Step 4: Avoid Vague or Generic Terms

    • Descriptions like “consultancy” or “services” are too broad.
    • Use “IT consultancy for healthcare businesses” instead.

    Common Mistakes to Avoid When Specifying Business Activities for VAT

    Even small errors in your business activity for VAT registration can have serious consequences. Here are the most common mistakes:

    Common Errors

    • Using overly broad terms like “trading,” “consulting,” or “manufacturing” without details.
    • Copy-pasting unrelated text from your business profile or marketing copy.
    • Omitting key parts of your business activity, such as exports or B2B sales.
    • Inconsistency between your trade license and VAT registration details.
    • Failing to update the description when your business activities change.

    Avoiding these errors ensures smoother approval and better compliance down the line.

    Understanding the Difference Between Business and Non-Business Activities

    To complete VAT registration correctly, it’s essential to understand business vs. non-business activities from the FTA’s perspective.

    1. What are Business Activities?

    Business activities include any ongoing economic activity conducted for profit, including:

    • Buying and selling goods
    • Providing services
    • Import/export operations
    • Leasing commercial property

    2. What are Non-Business Activities?

    Non-business activities are not subject to VAT and may include:

    • Private transactions (e.g., selling your car)
    • Passive income, like dividends
    • Activities that are not continuous or profit-driven

    Understanding this distinction ensures that only valid activities are listed in your VAT registration, thereby avoiding tax liability for non-business activities.

    Business and Non-Business Activities for Charities and Non-Profits

    Charities in the UAE often engage in both business and non-business activities. Proper classification is essential for VAT purposes.

    1. Non-Business (Exempt) Activities

    • Purely charitable donations without benefit to the donor
    • Free community services or events
    • Religious services without commercial intent

    2. Business Activities (Taxable)

    • Sale of goods or merchandise
    • Paid educational or training services
    • Commercial sponsorships or venue rentals

    Even non-profits must register for VAT if their business activity exceeds the AED 375,000 threshold for VAT registration purposes. Therefore, charities must clearly distinguish between the two categories when registering.

    An accurate and detailed business activity description is essential for VAT registration and regulatory compliance in the UAE. It affects your tax status, obligations, and how the FTA handles your filings. By following the best practices outlined above and avoiding common mistakes, you can ensure that your business is classified correctly and remains fully compliant.

    Whether you’re a startup, SME, or non-profit, getting your business activity for VAT registration right from the beginning can save you time, money, and legal issues down the line.

    Get Your Business Activity Description Right from the Start

    Getting your business activity description for VAT registration right is not just a regulatory formality, it’s a strategic move that affects how your business is classified, taxed, and audited by the Federal Tax Authority (FTA).

    A precise Business Activity for VAT Registration ensures you meet compliance requirements, avoid costly delays, and maximise benefits such as input tax recovery. It also helps distinguish between Business vs. Non-Business Activities, which is especially important for mixed-purpose entities like charities and SMEs with diverse income streams.

    By following industry best practices using specific and accurate terms, aligning with your trade license, and staying updated, you lay the groundwork for smooth VAT registration and long-term compliance. If you’re unsure how to draft your business activity description correctly or want to avoid common pitfalls, Shuraa Tax is here to help.

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

  • VAT Registration Process in Saudi Arabia

    VAT Registration Process in Saudi Arabia

    Value Added Tax (VAT) is now a regular part of running a business in Saudi Arabia. Since it was introduced, VAT has applied to most goods and services, which means almost every business needs to understand how it works. Even if you are starting a new company or already running one, knowing the basics of VAT is important to avoid mistakes and stay on the right side of the law. 

    VAT registration in Saudi Arabia is the first step in following the tax rules. Once you are registered, you can legally charge VAT to your customers and also recover VAT on certain business expenses. Registering on time helps you avoid penalties and gives your business a more professional and trustworthy image. 

    Some businesses must register for VAT because their annual turnover crosses the required limit, while others can choose to register even if it’s not compulsory. Knowing if you need to register and how the process works can make a big difference for your business. 

    What is VAT (Value Added Tax)? 

    VAT in Saudi Arabia is an indirect tax applied to most goods and services sold, as well as on imports. Every time a business sells a product or service (or imports goods), VAT is added at the applicable rate. The business collects that tax from its customers and then remits it to the government. 

    Current VAT Rate in KSA: 

    The standard VAT rate in Saudi Arabia is 15%. 

    • Standard Rate: 15% (Applies to most goods and services). 
    • Zero-Rated: 0% (Applies to exports, international transport, and qualifying medicines/medical goods). 
    • Exempt: No VAT is charged (Applies to residential real estate rentals and specific financial services). 

    VAT was first introduced in Saudi Arabia on January 1, 2018, at a rate of 5%. However, to address the economic impact of the global pandemic and stabilize revenue, the government increased the standard rate from 5% to 15%, effective July 1, 2020. 

    Who Needs to Register for VAT in Saudi Arabia? 

    VAT registration in Saudi Arabia depends on the annual value of your taxable supplies (sales). The Zakat, Tax and Customs Authority (ZATCA) has set specific revenue thresholds that determine whether registration is required, optional, or not needed at all. 

    1. Mandatory VAT Registration: 

    If a business (resident in Saudi Arabia) has taxable supplies (goods/services, imports, etc.) that exceed SAR 375,000 in the past 12 months or is expected to exceed SAR 375,000 in the coming 12 months, VAT registration becomes mandatory.  

    Once this threshold is surpassed, you have a 30-day window to complete the registration process with the authority. 

    2. Sector-Specific Mandates: 

    Regardless of whether a business meets the revenue threshold. The VAT registration in KSA is compulsory for specific sectors, including: 

    • Suppliers of designated goods and services: Businesses providing products or services specified by ZATCA must register. 
    • Importers: Companies importing goods into Saudi Arabia must register for VAT. 
    • Businesses using the reverse charge mechanism: Registration is mandatory if your business is responsible for paying VAT on goods or services received from another entity. 

    3. Voluntary VAT Registration: 

    Businesses whose taxable supplies (or incurred expenditures) are between SAR 187,500 and SAR 375,000 in the previous 12 months can opt for voluntary VAT registration. Voluntary registration can be beneficial for smaller businesses – for example, to claim input-VAT on purchases, improve credibility, or prepare for future growth. 

    4. Exemptions/Special Cases/When Registration Is Not Needed: 

    Businesses that exclusively make “Exempt Supplies” are not required to register for VAT. Unlike “Zero-Rated” supplies (where you register but charge 0%), “Exempt” supplies are completely outside the VAT network. 

    Common Exempt Categories include: 

    • Residential Real Estate: Rental or sale of residential property (intended for permanent dwelling). 
    • Financial Services: Margin-based financial products (e.g., interest on loans, life insurance policies). 
    • Govt. Bodies: Public bodies acting in their official capacity (not competing with the private sector). 

    Note: If you make both taxable and exempt supplies, you must register if your taxable portion exceeds the SAR 375,000 threshold. 

    5. Group VAT Registration: 

    Related businesses can apply to register as a single “VAT Group.” This treats them as one taxable person for VAT purposes. 

    Eligibility: 

    • Two or more legal persons resident in KSA. 
    • They must be under common control (e.g., one entity owns 50% or more of the others). 
    • At least one member must individually meet the VAT registration eligibility. 

    Benefits: 

    • File only one consolidated VAT return for the whole group. 
    • Transactions between group members are disregarded (no VAT is charged on intra-group sales), improving cash flow. 

    Documents Required for VAT Registration in Saudi Arabia 

    To complete your Saudi Arabia VAT registration, you need to submit a few basic business and identity documents through the ZATCA portal. This includes: 

    • Commercial Registration (CR) Certificate 
    • National ID (for Saudi owners) or Iqama & Passport (for expatriate owners) 
    • Bank Account Details (IBAN & bank name) 
    • Business Address Proof / National Address Registration 
    • Details of Business Activities 
    • Financial Records (past 12 months revenue or expected annual turnover) 
    • Zakat or Income Tax Registration Details (if applicable) 
    • Authorized Signatory Details (if someone is applying on behalf of the business) 
    • Import/Export License (if the business is involved in trading) 
    • Any Additional Supporting Documents requested by ZATCA 

    What is the VAT Registration Process in Saudi Arabia? 

    VAT registration in Saudi Arabia is completed online through the ZATCA (Zakat, Tax and Customs Authority) portal. Here’s an overview: 

    Step 1: Create an Account on the ZATCA Portal 

    The first step is to create your business account on the official ZATCA website. You will need your Commercial Registration (CR) number, a valid mobile number, and email address.  

    After submitting these details, you will receive a verification code to activate your account. Once activated, this account will be used for all future tax services, including VAT filing and payments. 

    Step 2: Log In and Select VAT Registration 

    After logging into your ZATCA account, go to the Tax Services section and choose VAT Registration. The system will guide you to the VAT registration application form. Make sure you select the correct type of registration (mandatory or voluntary) based on your business turnover. 

    Step 3: Enter Business Information 

    In this step, you must enter your complete business details, including: 

    • Legal business name 
    • Commercial Registration details 
    • Business address and National Address 
    • Nature of business activity 
    • Date of business commencement 
    • Estimated or actual annual revenue 

    Step 4: Add Owner and Authorized Person Details 

    You will then be required to provide details of the business owner or authorized signatory, such as: 

    • National ID (for Saudis) or Iqama & Passport (for expatriates) 
    • Contact number and email address 
    • Position in the company 

    Step 5: Enter Financial & Bank Details 

    Next, you must enter your business bank account details, including: 

    • Bank name 
    • IBAN 
    • Account holder name 

    You will also be asked to declare your taxable sales, taxable expenses, and whether you deal in standard-rated, zero-rated, or exempt supplies. These financial details help ZATCA assess your VAT obligations correctly. 

    Step 6: Upload Required Documents 

    At this stage, you must upload clear copies of all required documents, such as: 

    • Commercial Registration Certificate 
    • National ID / Iqama & Passport 
    • National Address 
    • Bank account document or IBAN letter 
    • Any additional documents requested based on your business activity 

    Step 7: Review and Submit the Application 

    Before final submission, carefully review every section of the application. Even small mistakes in CR numbers, email IDs, or financial figures can delay approval. Once you are confident everything is correct, submit the VAT registration application through the portal. 

    Step 8: Application Review by ZATCA 

    After submission, ZATCA reviews your application and uploaded documents. If all information is correct, your application will be approved directly. If any clarification or correction is required, you will receive a notification through your ZATCA portal and registered email asking for additional details or document resubmission. 

    Step 9: Receive VAT Registration Certificate 

    Once your application is approved, you will receive your VAT Registration Certificate electronically through the portal. This certificate contains your VAT Registration Number (VAT ID).  

    From this point onward, your business is legally allowed to charge VAT on taxable supplies, issue VAT-compliant invoices, and file VAT returns as per the required schedule. 

    VAT Responsibilities After Registration 

    Once your business is registered for VAT in Saudi Arabia, you must follow several ongoing compliance rules set by ZATCA to avoid penalties and keep your business running smoothly. 

    • Issuing VAT-Compliant Invoices: After registration, you must issue proper VAT invoices for all taxable sales. These invoices should clearly mention your VAT registration number, the VAT amount charged, the date, and full buyer and seller details. 
    • Charging and Collecting VAT: You are required to charge 15% VAT on applicable goods and services and collect it from your customers. This VAT does not belong to the business, it must later be paid to ZATCA as part of your VAT return. 
    • Filing VAT Returns on Time: All VAT-registered businesses must file VAT returns regularly (monthly or quarterly, depending on your turnover). The return includes details such as total sales, VAT collected, VAT paid on business expense, nat VAT payable or refundable. 
    • Paying VAT to ZATCA: If your VAT return shows a payable amount, you must pay the VAT within the deadline. Late payments attract fines and additional penalties, so timely payment is very important. 
    • Maintaining Proper Records: You must keep all VAT-related records, such as, sales invoice, purchase invoice, bank statements, and VAT returns. These records should generally be kept for at least 6 years, as ZATCA may request them during audits. 
    • Updating Business Details on the ZATCA Portal: If any business details change, such as address, activity, authorized signatory, or bank account, you must update the information on the ZATCA portal without delay. 

    VAT Deregistration in Saudi Arabia (When & How) 

    VAT deregistration in Saudi Arabia is the process of officially cancelling your VAT registration with ZATCA when your business is no longer required to remain registered. This is just as important as registration, because failing to deregister on time can still lead to penalties and compliance issues.  

    When Can You Apply for VAT Deregistration? 

    You can apply for VAT deregistration in Saudi Arabia under the following situations: 

    • Business Closure: If your business has completely shut down. 
    • Turnover Falls Below the Voluntary Threshold: If your annual taxable turnover drops below SAR 187,500. 
    • Change in Business Activity: If your business no longer makes taxable supplies and only deals in VAT-exempt supplies. 
    • Business Sale or Merger: If your business is sold, merged, or restructured in a way that affects VAT registration. 

    Once you become eligible, you must usually apply for deregistration within the time limit set by ZATCA to avoid penalties. 

    Step-by-Step VAT Deregistration Process in Saudi Arabia: 

    VAT deregistration is also done online through the ZATCA portal. Here’s how the process works: 

    1. Log in to the ZATCA Portal: Sign in using your registered CR number and login credentials. 
    2. Select VAT Deregistration: Go to the VAT services section and choose the VAT Deregistration option. 
    3. Choose the Reason for Deregistration: Select the appropriate reason such as business closure, reduced turnover, or change in business activity. 
    4. Enter the Effective Deregistration Date: You must mention the date from which your business stopped making taxable supplies. 
    5. Upload Supporting Documents: You may be asked to upload documents such as business closure proof, updated financial statements, and commercial registration cancellation (if the business is closed). 
    6. Submit the Application: After reviewing all details, submit your deregistration request. 
    7. Final VAT Return Filing: Before deregistration is fully approved, you must file your final VAT return and clear any outstanding VAT dues. 
    8. Deregistration Approval by ZATCA: Once ZATCA reviews and approves your request, your VAT registration will be officially cancelled. 

    Penalties for Late VAT Registration in Saudi Arabia 

    If a business fails to register for VAT on time when it is required, ZATCA can impose financial penalties. These penalties are meant to ensure strict compliance with Saudi tax laws.  

    • Late VAT Registration: A fixed penalty of SAR 10,000 for failing to register within the required time. 
    • Charging VAT Without Registration: If a business collects VAT without being registered, penalties can go up to SAR 100,000. 
    • Late VAT Return Filing: A penalty ranging from 5% to 25% of the VAT due. 
    • Late VAT Payment: A charge of 5% per month on the outstanding VAT amount. 

    Penalty Relief in 2025: 

    ZATCA is offering a temporary penalty exemption initiative until 31 December 2025, allowing businesses to reduce or waive certain fines if they register correctly, submit overdue returns, and pay pending VAT dues. 

    Make Your VAT Registration Simple & Stress-Free 

    VAT registration plays a big role in running a business smoothly in Saudi Arabia. It helps you stay legally compliant, avoid fines, issue proper tax invoices, and manage your business finances in a better way. If you don’t want to deal with the paperwork and technical steps on your own, Shuraa Tax is here to support you. 

    We offer complete taxation services across the UAE and the Middle East, and we make your VAT registration process quick, easy, and stress-free. From start to finish, our experts handle everything for you, so you can focus on growing your business with confidence. 

    Commonly Asked Questions 

    1. How do I obtain a Tax Identification Number (TIN) in Saudi Arabia? 

    You get your TIN automatically once your VAT registration is approved by ZATCA. It is included in your VAT registration certificate. 

    2. What is the timeline for VAT registration in KSA? 

    Once you submit your application correctly, VAT registration in KSA is usually completed within 5 to 15 working days, depending on document verification. 

    3. Is VAT registration mandatory for all businesses in Saudi Arabia? 

    No, VAT registration is mandatory only if your annual taxable turnover exceeds SAR 375,000. Below this, registration may be voluntary. 

    4. Can I apply for VAT registration online? 

    Yes, VAT registration in Saudi Arabia is completely online through the ZATCA portal. 

    5. What happens if I register for VAT late? 

    Late registration can lead to a SAR 10,000 penalty, along with other fines if VAT rules are not followed. 

    6. Can a small business register for VAT voluntarily? 

    Yes, businesses with turnover between SAR 187,500 and SAR 375,000 can apply for voluntary VAT registration. 

  • 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.