Who Should Register for VAT

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Deciphering VAT Registration and De-Registration

The United Arab Emirates (UAE) is also known as a business-friendly country as it has several business-friendly policies, including low and zero per cent tax rates. The nation has attracted countless foreign investors due to its business-friendly and low or zero tax rates policies.

Despite being tax-friendly, the UAE has launched VAT for businesses and individuals operating their companies in this country. The best thing about this country is that the nation does not impose VAT on all companies operating in this country. There are a few requirements when a business must register for the VAT. In addition,  corporations can deregister VAT if they no longer meet these requirements.

If you want to know about anything for VAT registration eligibility criteriayou should invest some time with us. We will list people who should register for Value Added Tax (VAT). In addition, we will tell who should deregister from VAT in the UAE.

vat & de-resgistration

What does VAT registration mean?

Still, several people are confused about the exact meaning of registration for Value Added Tax (VAT) in the United Arab Emirates (UAE). Being registered to the VAT in this country means that the Federal Tax Authority (FTA) understands that the business has reached the turnover limit for VAT. In addition, the company is required to collect the Value Added Tax (VAT) from its customers and remit the collected amount to the UAE government.

 

Who needs to register for VAT?

There are a few circumstances for registering for VAT in the United Arab Emirates (UAE). A business or person should register for Value Added Tax (VAT ) if its taxable supplies and imports exceed the mandatory registration limit of AED 375,000*.

A company or business can also select the registration for VAT voluntarily within the following conditions:

  • If the supplies and imports of the company are less than the mandatory registration limit but higher than the voluntary registration threshold of AED 187,500
  • Suppose the expenses of the business or company exceed the limit of voluntary registration. This chance enables start-ups with no or zero turnover to register for VAT in the United Arab Emirates.

If you meet the above requirements, you must move forward with the VAT registration in the United Arab Emirates. We recommend you consult Flyingcolour Tax Consultant to know the exact steps for the VAT registration process.

 

What types of businesses are eligible to register for VAT?

Apart from meeting the VAT registration eligibility criteria mentioned in the previous sectiona few types of businesses are eligible for VAT registration. A business is defined as any operation conducted regularly for VAT registration. These activities can be related to the commercial, industrial, trading, or professional industry for the same purpose. The following is the list of types of businesses that are eligible for the registration of Value Added Tax (VAT):

  • Limited Liability Companies
  • Clubs and Associations
  • Non-profit organizations
  • Sole Proprietorships
  • Partnerships
  • Trusts
  • Any other types of businesses

If your business is from any type of business mentioned above, you must register yourself or your company for Value Added Tax (VAT) in the UAE.

vat & de-resgistration

Are non-GCC residents needed to register?

The threshold of Value Added Tax (VAT)  in the UAE does not apply to companies that are not resident in the GCC. However,  any non-resident company will become obliged if they meet the following VAT registration eligibility criteria:

 

  • The company manufactures supplies and goods.
  • No other person acting on behalf of the business is required to account for VAT dues in the UAE.

VAT deregistration – overview

VAT deregistration is the opposite term of VAT registration. The VAT deregistration in the UAE lets a taxable person or company cancel their VAT registration and discontinue their TRN in the UAE. The Federal Tax Authority (FTA) VAT deregistration is an online process that can be performed on the official website of FTA.

Businesses and people who are registered under the FTA can de-register from VAT. Remember, VAT deregistration must be performed on time to avoid penalty or fine.  The late VAT deregistration penalty in the UAE is up to AED 10,000.

 

Who should deregister for VAT in the UAE?

There are a few cases when a person or company can apply for the VAT deregistration. The following is the list of circumstances when a business or taxable person can apply for the VAT deregistration:

  • If a company or person is still developing the taxable supplies but the total value in the previous twelve months was less than the Mandatory Registration Limit (AED 375,000)* and twelve months have passed since the registration date if you were registered voluntarily then the company or a person can apply for the VAT deregistration in the UAE.
  • If the corporation or a person stops creating taxable supplies and does not expect to make them for more than the next 12 months, they must apply for VAT Deregistration.
  • Suppose the business or individual is still making taxable supplies but the total value in the preceding 12 calendar months is less than the Voluntary Registration Threshold (AED 187,500.)* In that case, they must apply for the UAE VAT Deregistration.

vat & de-resgistration

When must you apply to deregister for VAT?

Article 14 of Executive Regulation of Federal Decree-Law No. 8 of 2017  on Value Added Tax (VAT) highlights the exact time of applying for deregister for VAT in the UAE. The taxpayer must apply for deregistration within twenty working days of meeting the mandatory conditions.

Suppose the relevant authority approves the application for deregistration. In that case, it then cancels the registration from the last day of the tax year or if the authority finds out any other date.

How can Flyingcolour Tax Consultant help you?

VAT registration and deregistration are essential for companies operating in the United  Arab Emirates (UAE). However, not all businesses are required to apply for VAT registration and deregistration. There are a few cases when these two operations become crucial for the business. Flyingcolour Tax Consultant can help you determine the exact time to register or deregister your company for VAT in this country. In addition, our experts can clear your doubts about Who needs to register for VAT.

To learn more about VAT registration and deregistration, book a free consultation with one of the Flyingcolour team advisors, simply call +971 50 5585305 or send WhatsApp messages to +971 4 4542366. you can also drop an email to info (at) flyingcolour (dot) com.

This article was published on 03-04-2024. The information provided in the article is based on the policies and rules applicable at the time of writing it. Talk to one of our consultants for any recent updates or changes.

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