UAE VAT Registration Requirements

Date prepared: 25 Dec 2017

Overview

Value-Added Tax or VAT is a tax on the consumption or use of goods and services levied at the point of sale. VAT is a form of indirect tax and is used in more than 180 countries around the world.

VAT is charged at each step of the ‘supply chain’. End consumers generally bear the VAT cost while registered businesses collect and account for the tax, in a way acting as a tax collector on behalf of the Federal Tax Authority.

Only VAT registered businesses will need to charge and account for VAT

Registration

Any business which exceeds mandatory or voluntary registration thresholds may be required or may be able to register for VAT

The definition of business embraces most forms of activity and includes any activity conducted regularly or on an ongoing basis, e.g. industrial, commercial, professional, trade, etc

Mandatory Registration

Any business that meets the below criterion must register,

• ●
• The total value of their taxable supplies made within the UAE exceeds the mandatory registration threshold over the previous 12 month period, or

• ●
• They anticipate making taxable supplies with a value exceeding the mandatory registration threshold in the next 30 days.

• ●
• The mandatory registration threshold will be AED 375,000.

This means that businesses must monitor the value of their supplies and imports on an ongoing basis to understand whether they are required to register for VAT.

Non residents making supplies in UAE

With the current clarifications, If a person is not a resident in UAE, makes any taxable supplies or imports in the UAE, they are required to register for VAT unless there is another person in the UAE who is responsible for accounting for VAT on such activities. In nutsheel, if a non-resident makes supplies to non-VAT registered individuals or corporates, must apply for VAT registration immediately.

In future FTA may provide more clarifications and may include persons registered in other GCC countries where VAT in implemented, to not mandatorily register for VAT in UAE while making taxable supplies to non-registered customers in UAE.

Voluntary Registration

Any business that meets the below criterion MAY register (and does not fall under Mandatory Registration threshold),

• ●
• The total value of their taxable supplies or taxable expenditure in the previous 12 months exceeds the voluntary registration threshold, or

• ●
• They anticipate that the total value of their taxable supplies or taxable expenditure will exceed the voluntary registration threshold in the next 30 days.

• ●
• The voluntary registration threshold will be AED 187,500.

When to register for VAT

Questions to consider

• 1.
• Have you made taxable suppliers over Mandatory Registration Threshold in last 12 months?

• 1.
• ●
• Answer: If yes, person must apply for registration within 30 days of exceeding the threshold.

• 2.
• Do you anticipate that your taxable supplies in next 30 days will exceed Mandatory Registration threshold?

• 2.
• ●
• Answer: If yes, you must apply for registration within 30 days starting on the date that the expectation arises

• 3.
• Are you a non-resident and supplying to non-VAT registered individuals or corporates in UAE?

• 3.
• ●
• Answer: If yes, you must apply for registration immediately before making such supplies and the registration will be effective from the date on which the person started making supplies in the UAE.

Examples for registration applicability as of 1st Jan 2018:

S.No	Description	Category?
1	A company doing trading for many years and has done Taxable Turnover over AED 375,000 in last 12 months. Tip: Since already exceeding threshold in last 12 months so apply mandatorily	Mandatory
2	Company established on 1 July 2017 and has turnover of AED 50,000 per month and expect to have turnover of AED 20,000 in Jan 2018. Tip:So, they have done AED 300,000 in last period (even though period is less than 12 months) and expect to do AED 20,000 in next 30 days. Mandatory threshold is not reached in last 12 months nor expects to reach in next 30 days so should apply on voluntary basis.	Voluntary
3	Company established on 1 Dec 2017 and has turnover of AED 50,000 in December 2017 and expects to have turnover of AED 190,000 in Jan 2018. Tip:Can apply on voluntary basis since expect to exceed voluntary threshold in next 30 days	Voluntary
4	Company established on 1 July 2017 and has turnover of AED 50,000 per month and expect to make turnover of AED 100,000 in next 30 days. Tip:So, they have done AED 300,000 in last period July 2017-Dec 2017 (even though period is less than 12 months) and expect to do AED 100,000 in Jan 2018. Mandatory threshold is not reached in last 12 months nor expects to reach in next 30 days so should apply on voluntary basis (since voluntary threshold limit is reach in last 12 months)	Voluntary
5	Company established on 1 Dec 2017 and has Nil turnover for Dec 2017 and expect to have turnover of AED 100,000 in Jan 2018. The taxable expenditure in Dec 2017 was AED 50,000 and expect to have further such expense in Jan 2018 of AED 60,000 Tip:So, on turnover side, Company is not able to qualify for mandatory or voluntary. On expense side as well Company is not able to qualify for mandatory or voluntary	Cannot register
6	Company established on 1 Dec 2017 and has turnover of AED 100,000 for Dec 2017 and expect to have further turnover of AED 100,000 in Jan 2018. The value taxable expenditure in Dec 2017 was AED 190,000 and expect to have further such expense in Jan 2018 of AED 110,000 Tip: On the turnover side, Company has not crossed voluntary limit in last 12 month nor in next 30 days so cannot register from that perspective. However on expenses side, taxable expenses in last 12 months is already above Voluntary threshold limit so can apply on voluntary basis.	Voluntary
7	Company established on 1 July 2017 and has turnover of AED 40,000 per month and expect to carry same level in future. Tip:So, on turnover side it will make AED 240,000 in 6 months (which is within last 12 months), Company is able to surpass voluntary threshold limit and can register.	Voluntary
8	A company established in Dec 2017 and has Nil turnover for Dec 2017 and further do not expect any turnover in Jan 2018. However company expects to make taxable supplies in future The value of taxable expenditure in Dec 2017 was AED 190,000 Tip:Since company has reached voluntary threshold expenses in last 12 months, it can apply on voluntary basis.
9	A company established in Dec 2017 and has Nil turnover for Dec 2017 and further do not expect any turnover in Jan 2018. However company expects to make taxable supplies in future The value of taxable expenditure in Dec 2017 was AED 50,000 and expect to have same in Jan 2018 Tip:Since company has not reached voluntary threshold in last 12 months nor expect to achieve in next 30 days, it cannot apply from turnover perspective. On the expenses side as well it is not reaching voluntary threshold limits, so cannot register.	Cannot register

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DISCLAIMER:

This document is only for information purposes and should not be construed as an advice. It does not necessarily cover each aspect of the topic with which it deals. You should not act upon the contents of this document without receiving formal advice on your particular circumstances.

If you would like to discuss any VAT matters or VAT services in Dubai & UAE, please drop us an email at info@premier-brains.com or call us at +97143542959.