VAT Registration in UAE: Expert Services by ICB

Value Added Tax (VAT) is an indirect tax applied to the consumption of goods and services at each stage of the supply chain. While businesses act as intermediaries in collecting VAT, the cost is ultimately borne by the end consumer. The United Arab Emirates introduced VAT on 1st January 2018, at a rate of 5%, as part of a broader initiative to diversify its economy and reduce dependency on oil revenue.

For businesses in the UAE, handling the VAT framework can be complex due to evolving regulations, filing requirements, and audit risks. Partnering with a qualified VAT registration consultant in UAE ensures that your business meets all compliance obligations.

Why Register for VAT in UAE?

VAT (Value Added Tax) was introduced in the UAE on January 1, 2018, as part of the government's efforts to diversify the economy and reduce dependency on oil revenues. Businesses must register for VAT if their taxable supplies and imports exceed AED 375,000 per year. Voluntary registration is also available for businesses with supplies and imports exceeding AED 187,500 per year.

Registering for VAT in the UAE requires more than just submitting forms; it demands a clear understanding of legal obligations, turnover thresholds, and accurate documentation. Errors or delays can lead to penalties and compliance issues.

ICB, your expert VAT registration consultant in UAE, ensures that your registration process is smooth, error-free, and fully compliant with the UAE Federal Tax Authority (FTA) regulations. We assist in determining your eligibility, gathering the necessary documents, and completing the submission process, saving you time, effort, and potential legal complications.

Who Needs to Register for VAT?

In the UAE, both local and international businesses are required to register for VAT within 30 days once their taxable supplies and imports exceed the mandatory threshold of AED 375,000. However, businesses that fall below this threshold may still opt for voluntary VAT registration.

To qualify for VAT registration in Dubai, businesses must meet the following criteria:

• Be a legally recognized entity (individual, company, partnership, etc.).
• Be engaged in ongoing economic activities such as business, trade, or a profession.
• Make taxable supplies, including goods and services subject to VAT.

1. Mandatory VAT Registration

Businesses must register for VAT if their taxable supplies match or surpass the AED 375,000 threshold. Taxable supplies encompass goods and services subject to VAT, which can either be charged at the standard rate of 5% or be zero-rated. Below are the key criteria for mandatory VAT registration:

• Businesses with taxable supplies exceeding AED 375,000 annually.
• Businesses that anticipate exceeding the AED 375,000 threshold within the next 30 days.
• Businesses engaged in the supply of goods and services that are subject to VAT, irrespective of turnover.

2. Voluntary Registration

VAT registration is voluntary for businesses with taxable supplies or expenses between AED 187,500 and AED 375,000. For startups and smaller companies aiming to grow, voluntary registration offers a major advantage: the ability to claim input VAT on expenses. Businesses below these thresholds are not required to register but can still choose voluntary registration to benefit from input tax credits.

As per the latest FTA clarification, simply meeting the threshold is not enough. Businesses, whether natural or legal persons, must also provide clear evidence that they are actively conducting business in the UAE, or have a genuine intention to make taxable supplies (either within the UAE or outside the country, provided such supplies would be taxable if made locally).

Voluntary registration is ideal for:

• Businesses with taxable supplies below AED 375,000 annually.
• Businesses dealing in zero-rated supplies (such as exports).
• Businesses interested in claiming VAT refunds.
• Businesses seeking enhanced credibility and reputation.

Other Eligible Persons:

• Non-resident businesses carrying out taxable activities in the UAE must register for VAT, regardless of the above-mentioned thresholds.
• Businesses involved in real estate services, including property rentals or leases.
• Businesses involved in the supply of goods and services are subject to VAT, even if the turnover is below the threshold.

Before beginning your VAT registration application on the EmaraTax portal, ensure you have an experienced VAT registration consultant in UAE to assist you, and that the following documents and details are ready in the correct format:

1. General Requirements

• Valid trade license(s)
• Emirates ID and passport copies of the authorized signatory(s)
• Proof of authorization for the signatory(s)
• Contact information
• An official bank letter confirming the applicant’s bank account information

2. Additional Documents Based on Registration Criteria:

• For taxable supplies (applicable for all legal types except Federal and Emirate Government)

1. Audit report, audited or non-audited financial statement.
2. Self-prepared calculation sheet, which may include details to calculate the taxable/zero-rated supplies based on financial records
3. Revenue forecast supported by evidence (e.g., local purchase orders or contracts)
4. Monthly turnover declaration signed and stamped on the entity’s letterhead by an authorized signatory
5. Supporting financial documents such as invoices, LPOs, contracts, tenancy agreements, or title deeds

• For taxable expenses (applicable for all legal types except Federal and Emirate Government):

1. Audit report, audited or non-audited financial statement
2. Expense budget report
3. Articles of Association/Partnership Agreement (if applicable)

3. Other Relevant Documents (As Applicable):

• Certificate of incorporation (if applicable for Legal Person)
• Documents that show ownership information of the business
• Customs details (if applicable)
• Power of Attorney documents (if applicable)
• Registration documents and supporting evidence for clubs, charities, or associations (applicable if you selected “Legal person– Club, Charity or Association”)
• A copy of the Decree (applicable if you selected “Legal person– Federal UAE Government Entity” or “Legal person– Emirate UAE Government Entity”)
• Other relevant business documents describing company activities and size (applicable if you selected “Legal person– Other”)
• A scanned copy of the Emirates ID and passport of the manager, owner, and senior management
• A scanned copy of the land/property title deed (applicable if you selected “Legal Person – incorporate/Legal Person – Club or Association/Legal - Person – Charity/Legal Person – Federal UAE Government Entity/Legal person – Emirate UAE Government Entity/Natural Person”)

File Upload Guidelines:

• Accepted formats: PDF, JPG, PNG, JPEG
• Maximum file size per document: 5MB

Note (Important Amendment by the FTA):

As per the recent clarification by the Federal Tax Authority (FTA), natural or legal persons applying for voluntary VAT registration must provide evidence demonstrating that they conduct business in the UAE and intend to make either taxable supplies or supplies outside the UAE that would be taxable if made within the UAE.

Required Forms:

Below are the templates that you may need to complete and upload as part of your online application:

• Turnover declaration template for taxable supplies
• Turnover declaration template for taxable expenses
• Turnover declaration letter form