Registering For Vat in UAE
Value-Added Tax or VAT is a tax on the consumption or use of goods and services raised at the point of sale. VAT is a form of indirect tax and is applicable in more than 150 countries around the world. All countries have VAT (or similar regulation). While it feels similar to Sales Tax generally imposed on end-consumers, VAT is a more advanced tax system and overcomes many challenges that affect the general sales tax.
VAT is charged at each step of the supply chain where end consumers bear the VAT cost while professional entities collect and act in a way as a tax collector on behalf of the Federal Tax Authority.
Registering for VAT
An entity must register for VAT if their taxable income exceeds the mandatory registration limit of AED 375,000.
Furthermore, an entity may choose to register for VAT voluntarily if their income is less than the mandatory registration limit but exceed the voluntary registration cap of AED 187,500.
Similarly, an entity may register voluntarily if their expenses exceed the voluntary registration cap of AED 187,500. This option to register voluntarily is available to enable start-up companies with low turnover to register for VAT.
To register for VAT please contact our specialist for clarification https://www.sfm.com/contact-us.html
Mandatory VAT rules on entities:
- Must charge VAT on taxable goods or services they offer;
- May reclaim any charged VAT on business-related goods or services;
- Keep accounts record which will allow the government to evaluate and receive the collected VAT
If you are a VAT-registered entity, you must prepare your accounts report, the amount of VAT you’ve charged and the amount of VAT you’ve paid to the government on a quarterly schedule. However, for large groups, the tax submission period is on a monthly schedule. It will be a formal submission and it is done easily online thought the Federal Tax Authority portal
If you’ve charged more VAT than you’ve paid to the authority, you must adjust your accounts report and pay the difference to the government. If you’ve paid more VAT than you’ve charged, you can reclaim the difference back from the authority.
Entities exempted from VAT:
VAT, as a general consumption tax, will apply at 5% to all transactions of goods and services unless specifically exempted in Article (46) of the Federal Decree-Law No. (8) of 2017 on Value Added Tax, or subject to a rate of zero as per Article (45) of the Federal Decree-Law. such as:
- Exports of goods and services outside the UAE
- Certain means of transport, such as trains, trams, vessels, airplanes.
- First sale/rent of residential buildings.
- Aircraft or vessels designated for rescue and assistance by air or sea.
- Certain investments in precious metals such as raw gold.
- Certain healthcare services and related goods and services such as non-cosmetic surgeries
- Certain educational services and related goods and services such as tuition fees.
The designated zones exempted from VAT:
According to a cabinet decision no 59 of 2017 on designated zones for the purposes of the federal decree law no 8 of 2017 on Value Added Tax, there are some VAT exempted zones:
Abu Dhabi:
- Free Trade Zone of Khalifa Port
- Abu Dhabi Airport Free Zone
- Khalifa Industrial Zone
Dubai:
- Jebel Ali Free Zone (JAFZA)
- Dubai Cars and Automotive Zone (DUCAMZ)
- Dubai Textile City
- Zone Area in Al Quoz
- Zone Area in Al Qusais
- Dubai Aviation City
- Dubai Airport Free Zone (DAFZA)
Sharjah:
Ajman:
Umm Al Quwain:
- Umm Al Quwain Free Trade Zone in Ahmed Bin Rashid Port
- Umm Al Quwain Free Trade Zone
Ras Al Khaimah:
- RAK Economic Zone (RAKEZ)
- RAK Maritime City Free Zone
- RAK Airport Free Zone
Fujairah:
- Fujairah Free Zone
- Fujairah Oil Industry Zone (FOIZ)
