Everything About VAT In UAE
By: Tanvi fal Dessai
Thresholds for UAE VAT Registration Process
- Mandatory Registration: If the taxable turnover of the business is AED 375,000 or more in the previous 12 months.
- Voluntary Registration: The annual turnover or taxable expenses must be more than AED 187,500in the previous 12 months.
List of documents required for UAE VAT Registration Process
- Copy of Trade License
- Passport copy (Owner/partners)
- Emirates ID (Owner/partners)
- Company’s Bank Account details and IBAN
- Details Business Turnover for the last 12 months
- Customs Authority Registration code (if have)
Other Required Details for UAE VAT Registration Process
- O. Box.
- Projected revenues and expenses for the next 30.
- Details/Nature of Business Activities. (Import/Export or Trading).
- Names of GCC countries if doing business in them.
(Note: Documents as mentioned earlier and details should be kept ready before you start the registration process on the VAT registration portal.)
Steps for UAE VAT Registration Process:
- Go to FTA online portal.
- Sign up for a new account.
- After successful sign-up, start your registration process as guided on the FTA website.
- Enter relevant details and submit the application.
- On successful submission, Tax Registration Number (TRN) will be provided to the user.
The sign-up details will be used as your login and password.
Businesses will be notified by email and SMS when your TRN is generated.
TRN (Tax Registration Number) is the identification number given to every person registered under UAE VAT. It is mandatory that only persons having a valid TRN should charge VAT on supplies. FTA has created a separate section for to check the validity of the Tax Registration Number in the FTA e-service portal
After the email or SMS notification of the TRN following are the steps you should follow to check the validity of your TRN:
- Log in to FTA e-service portal by inserting your credentials
- Access your ‘TRN Verification’ by selecting the ‘Getting Help’ section
- Insert you TRN in the provided search field and Click on the search button
Note: If your TRN is valid that the results will be ‘TRN is available on the system’ followed by the registered person’s name. If the TRN is invalid than the results will be ‘TRN does not exist on the system’.
The UAE cabinet has approved a list of administrative sanctions to be imposed on businesses for tax violations. – fine or penalty shall not be less than AED 500 and no more than triple the amount of the transaction tax.
Following is the list of fines and penalties which were imposed by the FTA:
| Failure to keep the required records specified by the tax procedures law and the tax law. | 10,000 for the first time. 50,000 for each repeat violation. |
|---|---|
| Failure to submit a registration application within the timeframe specified by the tax law. | 20,000 |
| Failure to submit a deregistration application within the timeframe specified by the tax law. | 10,000 |
| Failure of the Registrant to submit a tax return within the timeframe specified by the tax law. | 1,000 for the first time. 2,000 in case of repetition within 24 months. |
| Failure to pay the tax stated in the tax return/tax assessment form within the timeframe specified by the tax law. | The taxable person will incur a late payment penalty as follows: • 2% of the unpaid tax is due immediately. • 4% is due on the seventh day following the deadline for payment. • 1% daily penalty will be charged on any amount that is still unpaid one calendar month after the deadline for payment, up to a maximum of 300%. |
| Submission of incorrect tax returns. | Two penalties are applied: • Fixed penalty of: o (3,000) for the first time. o (5,000) in case of repetition. • Percentage-based penalty shall be applied on the amount unpaid to the Authority due to the error as follows: o (50%) if the Registrant does not make a voluntary disclosure or he made the voluntary disclosure after being notified of the tax audit and the Authority has started the tax audit process, or after being asked for information relating to the tax audit, whichever takes place first. o (30%) if the Registrant makes a voluntary disclosure after being notified of the tax audit and before the Authority starts the tax audit. o (5%) if the Registrant makes a voluntary disclosure before being notified of the tax audit by the Authority. |
| Failure to account for tax due on import of goods as required under the tax law. | 50% of unpaid or undeclared tax. |
Following are the cases when a business can apply for the deregistration of VAT:
- If the business, no longer deals with the goods/ services for which it was liable to pay taxes
- If the business’s sales/ purchase invoices incurred over the past 12 consecutive months is less than the voluntary registration threshold and do not anticipate crossing this threshold in the next 30 days.
- If the company is going through liquidation (closing the firm).
Note: Any business who has voluntarily registered under VAT cannot apply for de-registration in the 12 months following the date of registration.
- The registrant should ensure that due tax and administrative penalties have been paid and tax has been filed.
- The registrant should apply for deregistration within 20 business days of the occurrence of either of the above 3 events.
- The registrant should apply for deregistration on the online FTA web portal.
If the deregistration application is approved, the tax registration will be canceled. A notification of successful deregistration will be sent to the registrant after 10 business days of the application being approved.