VAT Registration Formalities in UAE

VAT Registration in UAE

VAT is a transaction-based tax which is imposed on most supplies of goods and services. However, the obligation to charge VAT only extends to persons who are registered for VAT or are required to register for VAT in UAE. These persons are known as “taxable persons”. A taxable person who is registered for VAT receives a tax registration number (‘TRN’) and is referred to as a “registrant”.

Who should apply for VAT Registration in UAE?

If a person is a resident in the UAE or any other GCC state that has implemented VAT in accordance with the Common VAT Agreement of the States of the Gulf Cooperation Council, the person is required to register for VAT mandatorily if:

• The total value of their taxable supplies and imports made within the UAE exceeds the Mandatory Registration Threshold of AED 375,000 over the previous 12-month period; or
• The person anticipates that the total value of their taxable supplies or imports will exceed AED 375,000 in the next 30 days.

If the VAT Registration is not obtained on time under Mandatory registration, then a penalty of AED 10,000 will be levied on the E-services portal upon approval of registration.

Who can apply for VAT Registration voluntarily?

A person can voluntarily register for VAT if:

• At the end of any month, the total value of the person’s taxable supplies and imports, or their expenses which were subject to VAT, in the previous 12 months exceeds the Voluntary Registration Threshold of AED 187,500; or
• The total value of the person’s taxable supplies and imports, or their expenses which are subject to VAT, in the next 30 days is expected to exceed the Voluntary Registration Threshold of AED 187,500.

VAT Deregistration in UAE

A taxable person must notify the FTA of the requirement to deregister within 20 business days from the end of the month in which any of the following occurs:

• The taxable person ceases making taxable supplies; or
• The value of the taxable person’s taxable supplies in the preceding 2 calendar months is less than the Voluntary Registration Threshold i.e. AED 187,500.

In case of failure by the registrant to submit a deregistration application within the stipulated time, applicable administrative penalty shall be AED 1,000 monthly penalty upto a maximum of AED 10,000.

HLB HAMT has a specialized team who can assist in timely deregistration by guiding through the requisite process and relevant documentation required.

VAT Grouping and subsequent Amendments in UAE

Companies in a group corporate structure can form a tax group if the below criteria are fulfilled: