Registration of a company as VAT payer in UAE – from 275 USD
We offer you our service of registration of a company as a VAT payer in UAE.
Registration can be made without visiting UAE personally.
In 2018, value added tax (VAT) at rate 5% was introduced in UAE.
Some companies in UAE must register as VAT payers
If you have a company that is subject to mandatory registration, you should as soon as possible submit an application for registration. Late submission of an application may result in penalty in amount of 20,000 dirham (AED) (5,500 dollars).
VAT in UAE
VAT is an indirect tax payable on sale of most goods and provision of most services. VAT is one of the most popular types of consumer taxes worldwide. More than 150 countries have introduced VAT or a similar tax, including all EU member countries, Canada, New Zealand, Australia, Singapore and Malaysia.
VAT is payable on each stage of delivery chain. Nevertheless, as result expenses on VAT are born by end consumers, while companies collect and account VAT. Actually, companies collect tax in the name of the state, and then pay this tax to the state upon collecting from customers. In some cases, companies may request at the state to refund VAT that they paid to their suppliers.
VAT account when registering a company in UAE
Which companies must register as VAT payers in UAE?
A company must register as a VAT payer in UAE if:
- a company is a resident company in UAE or any country of GCC;
- at that, a company delivers goods or provides services in the territory of UAE;
- meanwhile, a company currently or in the last 12 months had a taxable turnover of goods or services over AED 375,000 (102,180 dollars), or it is expected that in the nearest 30 days turnover of goods or services will exceed AED 375,000 (102,180 dollars).
How operations of a company for VAT purposes are accounted, if a company does not trade or does not provide services in UAE?
Services provided outside UAE and goods supplied outside UAE are taxed with VAT at rate 0%. Such operations are not exempted from VAT.
Which operations are VAT exempted when making business in UAE?
VAT free are the following sectors: local transport services, operations with undeveloped land areas, operations with real estate, and financial services.
Is it necessary to register as a VAT payer if a company is registered in any free economic zone UAE and does not make business in the territory of UAE?
If the turnover of taxable goods or services (including those taxable at rate 0%) exceeds AED 375,000 (102,180 dollars), then the company must register as a VAT payer in UAE.
Registration as a VAT payer with a turnover less than AED 375,000 (102,180 dollars) in 12 months
If a company operates in the territory of UAE but its turnover in the last 12 months made less than AED 375,000 (102,180 dollars), then a company does not have to register as a VAT payer.
Meanwhile, if a turnover of taxable goods or services in the last 12 months exceeds AED 187,500 (51,090 dollars), then a company can be registered as a VAT payer, but not mandatory.
If a turnover in the last 12 months made less than AED 187,500 (51,090 dollars), then a company cannot be registered as a VAT payer.
VAT rate at registration of a company in UAE
VAT rate in UAE makes 5%. The tax is payable on most goods and services, including income from commercial premises, consumer goods, and hotel services. Exclusion are cases where there are certain provision defining a zero rate, or exempting goods or services from VAT.
Goods and services imported from abroad are considered taxable.
Zero VAT rate is applied to certain goods and services, including educational services, healthcare services, investment gold, primary sale of residential houses, international freight and passenger transfer, and export.
Business exempted from VAT includes passenger transportation, sale of undeveloped land areas, sale of residential houses, and provision of certain financial services.
VAT rates in UAE for certain types of goods and services
Preventive and basic medical services, as well as corresponding goods and services, are exempted from VAT. Nevertheless, plastic surgery and services are not considered preventive or basic, and therefore are subject to VAT. Medical insurance products are not exempted from VAT and neither subject to zero VAT rate, therefore, VAT should be paid on annual premiums.
Services of pre-school institutions, kindergartens, primary school, and services of universities sponsored by the state are VAT-taxed at a zero rate. Fees in universities not sponsored by the state are taxed at a standard VAT rate.
A part of financial services is exempted from VAT, e.g. credits, products for life insurance, and mortgage.
International and local transfer
Although VAT is added to the price of gas, services of local passenger transfer such as bus, taxi, metro, are exempted from VAT. Services of international sea, air, or road transportation are also exempted from VAT.
Provision of real estate for the first time (i.e. by a developer) within three years upon finished construction for sale or lease is taxed with VAT at rate 0%. Further lease by the first buyer is exempted from VAT.
Nevertheless, for operations with commercial property (lease or sale) a standard VAT rate is applied.
Difference between zero VAT rate and exemption from VAT when registering a company in UAE
Companies that sell goods or provide services, for which zero VAT is applicable, must register as VAT payers but they still can return VAT that they had paid at purchases.
Companies that sell VAT-exempted goods or provide services cannot return VAT that they had paid at purchases.
Option of consolidating companies for VAT purposes when registering multiple companies in UAE
Companies that correspond to certain requirements provided by the legislation can register as a “tax group”. Among such requirements, for example, is that companies should have UAE residency and should be interrelated. ДFor some companies, tax consolidation will be a beneficial instrument that simplifies VAT accounting.
In UAE, many companies operate with multiple licenses and as a unified group. Companies can be registered in different emirates but still operate as one group. In such a case, companies can be registered together as a “tax group”. To let companies register as a group, the following provisions should be fulfilled:
- all companies must have their headquarters with a license (or a branch) in UAE.
- companies must be related parties.
Even if a person is not a shareholder in all companies, but controls these companies under a power of attorney, such companies can be viewed as related for the purposes of formation of a “tax group”.
To register as a “tax group” it is necessary to provide verification of the group structure, which shows a controlling or owning structure. Besides, it is necessary to provide board decision from each company-member of the group.
Bookkeeping in UAE
All companies, registered or not registered as VAT payers, must file such reports as balance, reports on the main assets, inventory stock, reports on profit and loss, and also bookkeeping reports that show all receipts, payments, sales, purchases, expenses and income.
Penalties at breach of VAT accounting rules when registering a company in UAE
According to regulations, non-payment of a tax results in a penalty at least AED 500 (137 dollars) and not less than triple-amount tax for the related transaction.
A tax must be paid even after a penalty is paid.
VAT in tourist business when registering a company in UAE
Tourists in UAE can get VAT refund. Tourists can request VAT refund on purchases they made when visiting UAE.
The refunding system only works for tourists who arrived to UAE outside countries of GCC.
To use the scheme of VAT refund for tourists, the following conditions must be fulfilled:
- goods should be provided to a tourist when he was present in UAE at the moment of purchase;
- tourist plans to leave within 90 days from the moment of purchase;
- tourist is to arrive from outside GCC countries.
Documents necessary for registration of a company in UAE as a VAT payer
To register a company in UAE as a VAT payer, the following documents and details are required:
- scanned business licenses, certificate of registration of company (if available) and by-laws;
- passports, “Emirates ID” and UAE visas of owners and manager of a company;
to be stated
- whether a manager or owners of a company in recent 5 years were involved in operation of another company in UAE (resident) as directors / managers / shareholders. If yes, then:
- to state the company name;
- to state whether this company currently exists (if yes, to provide scanned business license);
- company address, phone and PO Box;
- bank account details:
- whether the bank is in UAE or other country,
- bank name, SWIFT (BIC), branch;
- company turnover in the last 12 months;
- expected turnover in the nearest 30 days;
- if expected that VAT refund will always exceed payable VAT;
- whether a company performs operations exempted from VAT;
- whether a company plans to import goods or services (if yes, whether such import will be from other countries of GCC);
- whether a company plans to export goods or services (if yes, whether such export will be in other countries of GCC);
- whether a company has a “custom code” (if yes, to prove scanned code and state the issuing emirate);
- to state whether a client wishes to appeal for exemption from registration as a VAT payer in UAE.
Procedure of registration of a company in UAE as a VAT payer
To start registration of a company in UAE as a VAT payer, please contact us at [email protected], we will provide professional advice on this matter.
Then, you should pay for our assistance in registration of a company as a VAT payer in UAE using a bank card, systems WebMoney or Western Union, or a bank transfer. The price of our service starts from 275 dollars.
Upon payment, our client should send us scanned documents and necessary details. After that, our specialists complete necessary forms and file the application.
The Federal Tax Agency UAE (FTA) assigns a number within 20 days. The tax service may contact (via e-mail) and ask to clarify anything or may ask to provide other documents.
After 20 working days, the Tax Service sends a letter with a number. This number must be stated in all contracts, invoices and blank forms.
You can also contact us if you need to obtain a tax domicile certificate UAE for a company.
Feel free to contact us at [email protected] to register a company as a VAT payer in UAE!