According to the UAE Government, VAT will apply to a majority of
transactions in goods and services, with only a limited number of services and
goods being exempt. To date, some of these exemptions have been named as being
some real estate transactions, some transaction types related
to sharing dealing, education and basic/preventative healthcare to
name a few. This will require businesses of all sizes to maintain accurate
financial records that enable them to inform the Federal Tax Authority of their
company's financial position at any given time. Tax charged to customers for
services rendered must be cited on invoices and collected and then repaid to
the Federal Tax Authority.
For some businesses who are already maintaining their financial
records and books at a high standard, this will be a minor consideration, for
others, it will represent a paradigm shift in their internal
accounting/bookkeeping practices. In addition to this, the accrual and
management of VAT collected by companies and the legal framework surrounding
claiming back VAT from the Federal Tax Authority will represent an operational
and logistical challenge to all businesses.
(Mandatory registration) You will be required to be registered
when the VAT law is in force if you are a business that is resident in the GCC
and you are making supplies of goods or services in the UAE and either:
Your turnover was more than AED 375,000 in the last 12 months;
or You expect that your turnover will be more than AED 375,000 in
the next 30 days.(Voluntary registration) If you are not required to register,
you will be eligible to apply for registration when the VAT law is in force if:
Either your turnover or expenses (which will be subject to VAT)
were more than AED 187,500 in the last 12 months; or You expect that either your turnover or costs (which will be
subject to VAT) will be more than AED 187,500 in the next 30 days.
Who is registered for VAT purposes
When you register for VAT, you are registering the person that
is operating a business, not the business itself. A person can be an individual
(i.e. operating as a sole trader), or a legal person (further defined in
Section 4) or another form of entity (e.g. an unincorporated body such as a
charity or club, a partnership or trust). A VAT registration covers ALL of the
business activities undertaken by the registered person.
When you apply for VAT registration we will ask you for
information relating to the person that is to be registered, and the
current/intended business activities of that person.
Federal or Emirate Government bodies and other similar entities
in the UAE are to be registered in the name of the relevant body,
notwithstanding the fact that they might not be operating a business in the
Your obligations at this time
The Federal Tax Authority (FTA) is inviting applications for VAT
purposes (where the registration criteria set out below have been met) in the
interim to help businesses operating in the UAE prepare in good time for the
implementation of VAT on 1 January 2018.
Businesses with a turnover of over AED 150M should apply to
register before 31 October 2017. Firms with a turnover of over AED 10M should
apply to register before 30 November 2017. All other businesses need to have
applied by 4 December 2017 to be registered by the start of 2018.
Documents and information mandated to register for VAT in the
Prior to applying for VAT Registration, organization’s are
required to prepare the documents mentioned below. Soft copies of these
documents should be uploaded along with the organization’s application.
Proof of identity of the authorized signatory, such as passport
copy and Emirates ID
Copy of the company’s trade license
Other official documents authorizing the entity/individual to
conduct activities within the UAE, e.g., articles of association, certificate
of incorporation, power of attorney, etc.
Description of business activities
Turnover for the last 12 months in AED
Documents supporting the entity’s 12-month sales
Expected turnover in the coming 30 days
The estimated value of imports for one year from each GCC
The estimated value of exports for one year to each GCC country
Anticipated deals with GCC suppliers and/or customers
Supporting documents for customs registration in each Emirate,
Bank account details