Learn who needs VAT registration in the UAE, mandatory and voluntary thresholds, and how to apply through the FTA. BMS Auditing offers expert VAT consultancy for smooth and compliant registration.
Value Added Tax (VAT) was implemented in the UAE on 1st January 2018 to diversify the national revenue sources. VAT has since become an integral component of the country's tax system, and VAT registration in the UAE is mandatory for all qualifying entities operating in the UAE.
If you're unclear about when and how to register for VAT in the UAE, this detailed guide by BMS Auditing, your ever-reliable VAT consultant in the UAE, gives you all the information you need.
What Is VAT and Why Is It Important
VAT is a tax paid on consumption at every stage of the supply chain when value is added. Companies charge VAT on sales and pay it to the Federal Tax Authority (FTA), but are also allowed to claim credit for the VAT paid on business inputs.
Such a system only requires tax to be levied on the added value, encouraging fairness and openness in financial transactions.
Who Needs VAT Registration in the UAE?
Companies need to evaluate their turnover and business operations to ascertain if they should register for VAT.
- Mandatory VAT Registration
In case your taxable supplies and imports are AED 375,000 or more in the previous 12 months, or are projected to be AED 375,000 or more in the next 30 days, you are required to register for VAT. Not registering within a period of 30 days can incur penalties.
- Voluntary VAT Registration
If your turnover is higher than AED 187,500 but below the compulsory limit, you can apply for voluntary VAT registration. This is especially beneficial for SMEs and new ventures wishing to recover input VAT and have a compliant record.
- Exemptions
Certain activities and sectors are exempt from VAT registration, such as:
- Sale and leasing of residential properties (non-zero-rated)
- Some financial services
- Local passenger transportation
- Supply of vacant land
How to Register for VAT in the UAE
Here is a step-by-step process to guide you through the VAT registration process:
Step 1: Check Eligibility
Verify whether your annual turnover exceeds the voluntary or mandatory thresholds of the FTA.
Step 2: Prepare the Required Documents
Documents include:
- Trade licence
- Passport and Emirates ID of authorized signatories
- Proof of authorization (e.g., Power of Attorney)
- Business contact details
- Bank account verification letter
- MOA or partnership agreement (if applicable)
- Customs details (if involved in imports/exports)
Step 3: Create an FTA Account
Go to the FTA e-services portal and sign up for an account.
Step 4: Fill in the VAT Registration Form
The BMS Auditing tax team will handle all data and document submission processes and ensure that you get the confirmation for the registration without further complications. Inaccurate information or incomplete documentation may result in unforeseen delays, which may in turn bring about unwanted penalties from the FTA.
Post-Registration VAT Compliance Tips
After registering, your company must stay compliant to avoid penalties by:
- Charging VAT properly on taxable supplies.
- Keeping proper records of sales, purchases, and VAT dealings.
- Issuing invoices that are VAT compliant, containing TRN and invoice information.
- Filing VAT returns timely, normally quarterly.
- Retaining financial records for a minimum of five years, as required by the FTA.
Why Choose BMS Auditing Your VAT Consultant in the UAE?
BMS Auditing specializes in assisting businesses in navigating the intricacies of VAT compliance in the UAE. From preparing documents and filing applications to post-registration compliance, our experts ensure your business remains fully compliant with FTA regulations.
We help streamline your VAT computations, increase accuracy, and reduce human errors during reporting—sparing you heavy penalties and giving you the leeway to focus on expanding your business.
BMS Auditing: The Best VAT Services in the UAE!
Whatever your company size, be it a startup or a big business, it is important to know your VAT obligations. Let BMS Auditing, a leading VAT consultant in UAE, take care of your VAT registration, filings, and other compliances.
Get in touch with us today for a consultation and begin the journey to hassle-free VAT compliance!
