As all businesses in the UAE are aware, at a certain point you have to register for VAT, but when do you do that and what are some of the steps involved? The following article will give you a brief overview of everything that you need to know when you are registering for VAT.
When do you have to register and when do you have the option to register?
As a UAE resident with a business providing taxable supplies, it is mandatory for you to register for VAT when your taxable supplies are more than AED 375,000 in any past period of 12 months or less. It is also your responsibility to register if you expect your taxable supplies to reach the mandatory threshold within the next 30 days. You do however also have the option to register for VAT voluntarily if your taxable supplies or expenses are more than AED 187,500 in the last 12 months or less or if you expect your taxable supplies or expenses to exceed that amount within the next 30 days
VAT registration can seem like a grueling task for which you need to be well prepared, and whilst it helps to have certain things in order it is a fairly straightforward process and can be done within a reasonable amount of time. There are a total of 9 steps and depending on the nature of your business you may have to add some additional documents but no more than that. Here is a brief breakdown of the steps so that you know what to expect:
1 – Entity details
-Upload your Certificate of Incorporation
-General information about yourself.
2 – Identification details
-Upload Trade licsense, Emirates ID and Passport
-Provide your business activity details
3 – Eligibility details
-Upload Taxable supplies (Excel), Taxable expenses (Excel) (Templates for both Excel spreadsheets are provided within the website), Excel template in PDF format signed by Authorized signatory, Scanned Purchase orders stamped and signed by the Authorized signatory of both the supplier and buyer, Sample expenses and sales invoice signed by the Authorized signatory
4 – Contact details
-Provide the address of your business as well as the mobile and landline number of your business and email address
5 – Business relationships
-Upload your Emirates ID and Passport as well as any business partners you may have
6 – Bank details
-Upload Bank Validation Letter
-General information about your bank
7 – Additional details
-Answer some general yes or no questions about your business
8 – Authorized signatory
-Add the detials of the Authorized signatory
9 – Review and declaration
-Check all the information you have added and declare that it is all accurate and correct
The following is a list of all the documents the FTA recommends you have prepared in order to help make it a more smooth process (please note that it is dependant on the nature of your business as to which documents you will need to provide at the time of application):
Valid Trade License / Business License(s).
Passport / Emirates ID of the authorised signatory(s).
Proof of authorisation for the authorised signatory(s).
A scanned copy of the Emirates ID and passport of the manager, owner and senior management.
Contact Information including a telephone landline number.
Bank letter validating the bank account details of the applicant.
Depending on the basis on which you are registering, other relevant documents may include:
For taxable supplies (applicable for all legal types except Federal and Emirate Government)
Audit report audited or non-audited financial statement.
Self-prepared calculation sheet which may include details to calculate the taxable/zero-rated supplies based on financial records.
Revenue forecast with evidence (e.g., Local Purchase Order or Contract).
Monthly turnover declaration for the specified periods that is signed and stamped by the authorized signatory on the entity’s printed letterhead.
Monthly turnover declaration for the specified periods that is signed and stamped by the authorized signatory on the entity’s printed letterhead.
Supporting financial documents (e.g., invoices/LPOs/contracts/title deed/tenancy contracts).
For taxable expenses (applicable for all legal types except Federal and Emirate Government)
Audit report, audited or non-audited financial statement
Articles of Association/Partnership Agreement (if applicable).
Certificate of Incorporation (if applicable for Legal Person).
Documents which show ownership information of the business.
Customs details (if applicable).
Power of Attorney documents (if applicable).
Other relevant documents such as documents providing information about your organization, including its activities and size (applicable if you selected “Legal person – Other”).
Businesses all have their ups and downs, so what happens if you decide to stop doing business or if your taxable supplies suddenly fall below the mandatory threshold?
Once you have become a registrant you will then have the option to deregister which in itself is a very similar process to registering and, according to the FTA website, takes about 45 minutes to complete. You are required to deregister in the case that you have chosen to stop conducting business or if your taxable turnover is less than the voluntary registration threshold limit of AED 187,500. However you also have the option to voluntarily deregister if your taxable turnover exceeds the voluntary registration threshold limit of AED 187,500 but is still below the mandatory registration threshold limit of AED 375,000.
You are obligated to submit your application for deregistration within 20 business days from the date of occurrence of the event that requires you to deregister and should you not comply you will be fined AED 1,000. For every month after that on the same date if you have still not deregistered you can be fined up to AED 10,000.
By working with our Bespoke Accounting team you can save both time and money while having the reassurance and peace of mind that you’re making sound business decisions for your future.
Whether you need help with VAT filing, monthly bookkeeping or budgets and strategies for your business, get in touch with us to see how we can help you grow your business. Have a look at how we have been helping our clients. If you have any questions, simply book your free 30 minute consultation.
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