Vat Registration & Deregistration
Do You Fall Under The Category of being VAT Registered?
If Yes, When? If Not, For
How Long? What To Calculate?
Can You Get Out Of The VAT Circle? If Yes, How?
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VAT Registration Services in
Abu Dhabi, UAE
Any person conducting an economic activity for an income is a taxable person and must be registered under UAE VAT if the value of taxable supplies made by the person exceeds the registration threshold.
Therefore, to establish whether a person must register for VAT, he must monitor the level of his taxable supplies to ascertain whether he has met the prescribed VAT registration threshold.
On this basis, VAT registration in UAE can be classified into the following:
➤ Mandatory VAT Registration
➤ Voluntary VAT Registration
It should be noted that there is no registration threshold for non-residents in the UAE. Non-residents are required to register for VAT as soon as they make any supplies of goods and services unless the customer is required to account for the VAT under reverse charge.
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Mandatory VAT Registration
The mandatory registration threshold is AED 375,000. A business must register for VAT if it meets the below criteria:
➤ The taxable supplies and imports exceed the mandatory registration threshold over the previous 12 months.
➤ Anticipates that the total value of its taxable supplies and imports will exceed the mandatory registration threshold in the next 30 days.
Voluntary VAT Registration
The voluntary registration threshold is AED 187,500. A business may apply to register if it does not meet the mandatory registration criteria and:
➤ The total value of its taxable supplies and imports or taxable expenses in the previous 12 months exceeds the voluntary registration threshold.
➤ The business anticipates that the total value of its taxable supplies and imports or taxable expenses will exceed the voluntary registration threshold in the next 30 days.
A taxable supply is a supply of goods or services on which VAT is chargeable at the standard rate or zero rate of tax. In determining whether registration limits have been exceeded, it is, therefore, necessary to consider the total value of supplies of goods and services exclusive of VAT made and received by a taxable person in the UAE.
To determine whether a person has exceeded the Mandatory Registration Threshold or the Voluntary Registration Threshold, the following shall be calculated:
➤ The value of Taxable Goods and Services.
➤ The value of goods and services that have been imported and that would not be exempt if supplied within the UAE.
➤ Supplies made by a business acquired by another business are considered to be supplied of the acquiring business and are included in the calculation.
➤ The value of Taxable Supplies made by Related Parties pursuant to the cases stated in the Executive Regulation.
Exempt supplies and supplies of goods and services that are outside the scope of VAT should not be included in the turnover figure when determining if the business has exceeded the VAT registration threshold.
Documents & Information Required For VAT Registration In UAE
Before applying for VAT Registration, below mentioned documents are required to be kept ready. The soft copies of the documents should also be uploaded along with the application.
➤ Documents identifying the authorized signatory, e.g. passport copy, Emirates ID.
➤ Trade license copy of the company.
➤ Other official documents authorizing the entity/individual to conduct activities within the UAE, e.g. certificate of incorporation, articles of association, power of attorney etc.
➤ Description of business activities.
➤ Turnover for the last 12 months in AED.
➤ Supporting document for 12-month sales.
➤ Expected turnover in next 30 days.
➤ The estimated value of imports for one year from each GCC countries.
➤ The estimated value of exports for one year to each GCC countries.
➤ Whether you expect to deal with GCC suppliers or customers.
➤ Supporting documents for customs registration in each emirate if applicable.
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VAT Deregistration in Abu Dhabi, UAE
Tax De-registration is the provision for a registered taxable person to cancel his/her VAT registration. It means de-activation of the registration and the VAT number of the taxable person. Tax deregistration can be applied for by a person registered under VAT or done by the FTA on finding that a person meets the conditions for deregistration.
Mandatory VAT Deregistration
A registered person must deregister mandatorily if at the end of any month the following occurs:
➤ The person ceases to make taxable supplies and does not intend to make taxable supplies in the coming 12 months.
➤ The annual supplies or expenses in the previous 12 months or future 30 days do not exceed the voluntary registration threshold of AED 187,500.
Mandatory VAT deregistration will take effect from the last day of the tax period in which the conditions for deregistration are met or from another date as determined by the authority.
Voluntary VAT Deregistration
➤ A registered person may deregister voluntarily if at the end of any month, his value of taxable supplies in the previous 12 months does not exceed the mandatory registration threshold.
➤ A person who has registered voluntarily for VAT must be registered for a minimum of 12 months from the date of registration before being able to apply for deregistration.
Voluntary VAT deregistration will be effective from the date requested by the registered person or the date when the request is made when no preferred date is mentioned.
The application for VAT deregistration must be made in electronic form as prescribed by the authority and within 20 business days from when the conditions for deregistration were met. In addition, a registered person cannot be deregistered if the person has not paid any outstanding VAT penalties and VAT liability in full and submitted all relevant VAT returns.
It isn’t easy to know whether a business should register or to determine whether to register voluntarily. If you do not register at the right time, your business will be subject to penalties!
To help you understand the complexities of VAT registration, seek advice from MS VAT experts. What if, for instance, your company spends most of the year under the threshold but crosses the threshold in the last month? What if you expect that you are going to reach the threshold but do not?
There is also an administrative burden associated with VAT, as VAT returns would need to be done correctly and on time.
MS ensures that all the right boxes are ticked; not only to maximize your working capital but also to protect against all possible risks on your way!