The UAE is well known for its incredibly attractive tax environment. As it stands, the country continues to levy 0% tax on both corporate and personal incomes. However, while the tax landscape may be an attractive one, it’s not true to say that the UAE is tax-free. There is one common tax in place, payable by almost all individuals and many businesses, and that is VAT. Rolled out on 2018 at a flat rate of 5%, the new tax was introduced to provide the government with an additional source of income, outside of oil revenues, with which to provide a range of high-quality public services. Value Added Tax (VAT) is charged on the purchase/sale of taxable goods and services in UAE. The current standard rate of VAT in the country is 5% five percent. A VAT-registered business collects VAT on behalf of UAE Federal Tax Authority (FTA), and in doing so, it is entitled to claim VAT paid on expenses incurred on products/services for the business.

Mandatory VAT Registration in UAE

Voluntary VAT Registration in UAE

All the businesses having a place of residence in the state of UAE who are not required to mandatorily register under VAT, are given an option to voluntarily apply for VAT registration. This can be done, only if the annual supplies or taxable expenses incurred is not less than voluntary registration threshold. The Voluntary Registration Threshold is AED 187,500 which is 50% of the mandatory registration threshold. Here, the registrations are not mandatory, it is optional for business to decide whether they would want to register. The inclusion of taxable expenses as criteria to determine the eligibility for voluntary registration provides an opportunity for all the start-up business to register under UAE VAT. This is because, as a start-up, the turnover or value of supplies may be lesser but there is a high possibility that huge amount of taxable expenses would have been incurred in starting the business or during the initial stage of the business. As a result, the inclusion of taxable expenses as a criteria for voluntary registration would enable all the start-up business to register with zero turnover.

How to apply for VAT Registration in Dubai?

VAT registration require some official documents. Some important documents must be completed before submitting a VAT registration application to the FTA. Hence its advisable to appoint a registered accountant or firm, who can do your task hassle free.
Businesses or persons who want to register for VAT must first create an account on Federal Tax Authority (FTA) website. Next, fill in the required details – email address, password, security question etc. Once you have completed this step you will receive a confirmation email to your registered address. Once your email verified, you can log in to your e-service account and begin the VAT registration process. VAT Certificate will be issued after the approval of Tax Registration Number (TRN). Every VAT certificate will have a unique and specific Tax Registration Number (TRN).

Documents Required for VAT Registration

To get the Tax Registration Number (TRN), businesses must submit all the documents required for VAT Registration. For online VAT registration, the following are the documents required for VAT Registration:
1. Copy of trade license
2. Passport copy of business owner and partners
3. Copy of Emirates ID held by owner and partners
4. Memorandum of Association (MOA) of the company
5. Company contacts details
6. Bank account details
7. The income statement for the last 12 months
8. Nature of business and activities performed
All the documents required for VAT registration will be submitted to the Federal Tax Authority (FTA) After applying for the VAT registration in UAE, it will take approximately 5-6 working weeks for FTA to review the VAT registration application and issue the Tax Registration Number (TRN).

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