VAT Registration
Value Added Tax or simply VAT is an important milestone in UAE which UAE Ministry of Finance has announced to be implemented with effect from 1st January 2018. While offering limited exceptions to some categories including basic food items, healthcare and education, VAT will be collected at the rate of 5 % on the goods and services, at each step of the supply chain. The new VAT system will be implemented across the GCC countries, although possibly on different dates, at different rates.
In UAE, the businesses whose turnover exceeds AED 375,000 have to mandatorily apply for VAT registration. To facilitate the businesses to register, the Federal Tax Authority (FTA) has opened its portal for online VAT registration. The deadlines based on the turnover of businesses are already announced by FTA and the registration will be carried out in a phased manner. While it is crucial for businesses to determine their obligation towards VAT registration, it is also important for businesses to know how to apply for VAT Registration and understand the level of details required to complete the online registration process.
This is because, before applying or starting the online VAT registration process, having a good understanding about the type of details required and steps to complete the online VAT registration will help you to prepare well in advance. As a result, the registration process can be completed easily and can avoid unnecessary delays due to furnishing of incorrect details which could even lead to rejection of registration application.
VAT Implementation
The UAE Federal and Emirate governments provide citizens and residents with many different public services – including hospitals, roads, public schools, parks, waste control, and police services. These services are paid for using government budgets. VAT provides our country with a new source of income, contributing to the continued provision of high quality public services in the future. It also helps the government move towards its vision of reducing dependence on income derived from oil and other hydrocarbons. VAT was introduced across the UAE on 1st January 2018 at a standard rate of 5%.
SAAS gives guidance about the methods of VAT in the UAE, business type and compliance problems on the UAE VAT Law. Teams will be appointed to train the employees from each department having an implication on VAT.
VAT Return Filling Services
At the end of each tax period, VAT registered businesses or the ‘taxable persons’ must submit a ‘VAT return’ to Federal Tax Authority (FTA).
A VAT return summarizes the value of the supplies and purchases a taxable person has made during the tax period, and shows the taxable person’s VAT liability.
The liability of VAT is the difference between the output tax payable (VAT charged on supplies of goods and services) for a given tax period and the input tax (VAT incurred on purchases) recoverable for the same tax period.
Where the output tax exceeds the input tax amount, the difference must be paid to FTA. Where the input tax exceeds the output tax, a taxable person will have the excess input tax recovered; he will be entitled to set this off against subsequent payment due to FTA.
You must file for tax return electronically through the FTA portal: eservices.tax.gov.ae. Before filing the VAT return form on the portal, make sure you have met all tax returns requirements.
Taxable businesses must file VAT returns with FTA on a regular basis and usually within 28 days of the end of the ‘tax period’ as defined for each type of business. A ‘tax period’ is a specific period of time for which the payable tax shall be calculated and paid. The standard tax period is:
- quarterly for businesses with an annual turnover below AED150 million
- monthly for businesses with an annual turnover of AED150 million or more.
The FTA may, at its choice, assign a different tax period for certain type of businesses. Failure to file a tax return within the specified time frame will make the violator liable for fines as per the provisions of Cabinet Resolution No. 40 of 2017 on Administrative Penalties for Violations of Tax Laws in the UAE (PDF, 1 MB).