12 Important FAQs About VAT in UAE!

What is VAT in UAE?

VAT was introduced in the UAE on 1 January 2018 with a rate of 5% THE VAT as a general consumption Tax was applied on the majority of transactions of Goods and services. It is an Indirect Tax which is given by consumers on buying goods or taking services in UAE.
This is an additional amount of the goods and services, as the name implies

Who should register mandatory for VAT in UAE?

If a company’s taxable imports and supplies in the previous 12 months total more than AED 375,000, they are required to register for VAT. The Federal Tax Authority would provide a tax registration number (TRN) to the business following registration.

How will VAT be applied in UAE?

UAE and the GGC as a whole have proposed implementing Value Added Tax (VAT) beginning in January 2018. In the United Arab Emirates, the VAT rate is fixed at 5% for all goods and services.

Why has UAE decided to implement VAT?

In order to maintain a high standard of living and improved public services, it was decided to impose VAT. Additionally, VAT has been adopted in order to lessen dependence on oil revenue as EXPO 2020 approaches.

When should a business voluntarily register for VAT in the UAE?

If the supply and imports equal at least 50 percent (AED 187,500) of the statutory registration threshold, a business may elect to voluntarily register for VAT (AED 375,000).
The voluntary registration threshold (AED 187,500) was created to allow new start-up enterprises with no turnover to register for VAT and be eligible for input VAT, and startup businesses may do the same if their initial expenditure surpasses that amount.

Why should a business in UAE register for VAT?

VAT registration is advantageous for businesses since, unlike non-registered businesses, who’ve been end-users and are not eligible to collect VAT, only registered businesses can claim input VAT paid on their purchases and expenses. In other words, if a business is not registered, it loses input VAT and must bear the expense of input taxes, which drives up selling prices, reduces market competitiveness, and slows corporate growth.
Additionally, failure to register would result in fines and penalties imposed by the Federal Tax Authority (FTA). Registration is crucial as a result.

How to get registered for VAT in Dubai or any other part of UAE?

Through the e-services part of the UAE Federal Tax Authority (FTA) website, businesses can register for VAT. However, companies must first create an account and the process seems not very easy, each and every step is crucial. To finish this in an efficient way, contact Clever Corp for Business Setup in dubai, UAE and we would make your VAT registration quick and simpler.

What is TRN number and when is it required?

Tax Registration Numbers is the identification number given to every person registered under UAE VAT.It is mandatory that a person holding TRN number can charge VAT on supplies. Entities that owe taxes must complete the VAT registration process before receiving a TRN Number. Every time tax is paid, this TRN number is entered.

Which document should a company present as evidence of revenue for VAT registration?

As evidence of revenue for VAT registration, internal financial statements with annual turnover that have been duly validated by the management should be provided.

Who is a taxable person?

A taxable person is any individual who has registered or who is mandated to enroll for taxation purposes pursuant to VAT Decree-Law No. 8 of 2017. A taxable person is, in plain English, any anyone (natural or legal, corporate or not), engaged in business for profit, whose annual revenue exceeds the legal limit of AED 375,000. He is an individual who must pay taxes in accordance with the requirements of the applicable tax legislation.

Will VAT be applicable for business in free zone?

Yes, VAT will still be applicable for businesses in the free zone.

Does the business have to provide monthly records to the UAE Federal Tax Authority?

Generally, depending on the company’s VAT registration certificate, returns must be made either quarterly or monthly. The UAE Federal Tax Authority, who makes the final decision, may at any moment request that the business verify its data. Thus, keeping the accounting records up to date is essential.

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