If you’re an entrepreneur who has chosen to establish yourself in the UAE to make it big, then it’s important to understand how you need to comply with the UAE’s Value-Added Tax (VAT) regulations. In the UAE, VAT was implemented in 2018, and adhering to it is crucial in ensuring smooth business operations.
To adhere to VAT regulations, you first need to apply for VAT registration in the UAE. The process is an easy and hassle-free one. So, without further ado, let’s explore the step-by-step process of VAT registration for businesses in the UAE.
1. Determine VAT registration eligibility
Before anything else, the first step is to determine whether your business is eligible for VAT registration. Generally, businesses with a taxable supply exceeding AED 375,000 in a 12-month period are required to register for VAT. However, there are exceptions and specific criteria to consider. It would be recommended to consult with your business setup advisor for VAT consulting to understand how VAT registration works for you.
2. Get your documents together
To initiate the VAT registration process, you will need to gather the following documents:
- Trade License Copy: A certified copy of your business’s trade license.
- Passport Copies: Copies of passports of the business owners or authorised signatories.
- Bank Account Details: Information about your business’s bank account, including the bank name, account number, and IBAN.
- Proof of Address: Documents verifying your business’s physical address in the UAE.
- Power of Attorney (POA): If applicable, a POA authorising a specific individual to handle VAT-related matters.
3. Create your FTA portal account
Your Federal Tax Authority (FTA) Portal account is the next step on your list.
Visit the official FTA portal website and register by creating a new user account after entering all the information they require of you. Once registered, log in to your account to begin the VAT registration process.
4. Applying for registration
Look for the ‘VAT Registration’ section on the FTA portal and fill in the application form, providing accurate and updated information about your business. Then, upload the required documents specified above, review your information and submit the application.
5. Taxpayer Identification Number (TIN) Allocation
Upon successful verification of your application, the FTA will allocate a unique TIN to your business. This TIN will be used for all future VAT-related transactions. Keep this information handy as it is crucial for your business.
6. VAT Compliance and Record-Keeping
Your registration is complete! But remember, it’s essential to maintain accurate and detailed records of all your business transactions. This can include sales invoices, purchase invoices, input tax, output tax, and more. You will need to understand how to collect VAT invoices, issue VAT invoices, charge output tax, and claim input tax.
7. VAT returns
You will be required to file periodic VAT returns, typically on a monthly or quarterly basis, depending on your business’s turnover and VAT registration category. These VAT return filings involve reporting your sales, purchases, and the corresponding VAT amounts.
With a clear understanding of the VAT registration process, you can ensure that your business runs smoothly and is poised for success!
