VAT Registration In Dubai
Following a major national and regional consultation in January 2018. The standard VAT rate is 5%, one of the lowest in the world. As in other countries, the UAE government has introduced lower VAT rates and VAT exemptions for certain goods and services. Below, our Dubai business formation consultants give an overview of VAT Registration Services In Dubai in 2022.
Our local consultants have extensive experience in setting up businesses in Dubai and can assist foreign investors who have set up a business here with voluntary VAT registration.
We can also help you if you want to open a business in Dubai or register for VAT in the UAE.
What is VAT and what does it mean in Dubai?
VAT is an indirect tax collected on the sale of goods and services and can therefore be considered an excise duty. VAT is considered an indirect tax as it is collected by the final consumer who purchases the goods or services on which VAT is levied.
This creates problems for companies selling goods and services, as they have to collect the tax and pass it on to their budget, and for Dubai residents, VAT increases the prices of some goods and services that were previously not taxed.
Why is VAT necessary in Dubai?
The introduction of VAT is linked to a proposal by the International Monetary Fund. The reason for this recommendation is that the UAE government has no controllable revenue base and is therefore dependent on contributions from Dubai and Abu Dhabi.
In addition, the UAE is negotiating free trade agreements with the United States, the European Union, Australia, and China which will eliminate tariffs and thus reduce revenues from other countries. A final reason for the introduction of VAT in Dubai is the heavy dependence of the dirham (the local currency) on the US dollar, which makes the control of the monetary system very unstable.
Reduced VAT rates in the UAE
The following goods and services are subject to 0% VAT:
Exports,
International transport services
Air and sea transport services
Investment in valuable materials
Shipping and maritime transport
Educational services,
Health services.
Certain categories of services and goods will be exempt from VAT in Dubai in 2022. These include:
Local passenger transport services,
Sale of residential property by real estate agencies,
Sale of land,
Certain financial services.
To collect VAT, Dubai companies must register with the tax authorities.
Who will have to register for VAT in Dubai in 2022?
VAT is a relatively new tax, but the government has made great strides in explaining and helping those who need to register for the tax in the emirate. VAT registration is not compulsory for new businesses in the UAE, but may be mandatory under certain conditions. Here are the entities that are required to apply for VAT registration in Dubai:
Persons and companies providing taxable services in Dubai can voluntarily register for VAT,
Individuals and companies importing goods subject to VAT into Dubai can register for VAT on a voluntary basis.
Companies importing goods worth more than AED 187,500 per year can register for VAT.
Companies selling and/or importing goods and services worth more than AED 375,000 per year are required to register for this tax,
Foreign companies selling goods and services in Dubai that are subject to VAT must register for VAT.
A VAT company registered in Dubai calculates and collects the tax from the final consumer and remits it to the government. To do this, the company must submit a VAT return, which allows it to recover the VAT paid. It should be noted that foreign companies registered for VAT in Dubai can also claim a refund in Dubai.
If you want to start a business in Dubai, you can choose to register for VAT from the start and our business registration consultants will help you to do so.
What are the requirements to register for VAT in the UAE?
One of the basic requirements for applying for a VAT number in Dubai is a tax identification number. This is obtained together with the registration certificate and is issued by the Dubai Registrar of Companies. Depending on the tax identification number, the company is issued with a VAT certification.
A copy of the identity document must be submitted with the required visa for an individual.
Although VAT registration can be done through the Dubai Government’s online portal, the process can be quite complicated for entrepreneurs due to the large number of documents required and the need to create an online account. Our Dubai company formation experts can help.
Details of VAT registration in Dubai are given in the flowchart below
VAT registration in Dubai
Not all businesses supplying goods and services are required to register for VAT; only businesses with a registered turnover of more than AED 375,000. Businesses with a turnover of less than AED 187 500 are not required to register for VAT. The main advantage of VAT registration is that, when submitting its tax return, the company receives a refund of the amount it has paid as a result of the new tax. VAT returns are submitted electronically at the end of the tax period or quarterly.
Tax period.
Monthly for companies with an annual turnover of A$150 million or more.
Quarterly for companies with an annual turnover of less than A$150 million.
It should be noted that non-resident companies or individuals doing business in the UAE must also register here for VAT purposes.
All VAT invoices must be kept for five years.
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The registration procedure is straightforward and our accountants in Dubai can help local businesses apply for a VAT number.
VAT was first introduced in France in the 1950s and has been adopted by a growing number of countries since then. In recent years, CIS countries have also started to consider VAT. Countries such as the UAE, Saudi Arabia, Qatar, Kuwait, Bahrain and Oman are developing legislation to introduce VAT.
VAT accounting requirements
All businesses registered for VAT in Dubai are required to follow certain accounting procedures, including the submission of tax returns by a certain deadline. This deadline is set by the Dubai tax authorities.
The basic VAT accounting requirements are as follows.
Dubai companies must submit their VAT returns within 28 days after the end of the tax period.
Failure to file these returns is punishable by a fine of between Dh 10 000 and Dh 50 000.
Businesses with an annual turnover exceeding Dh 150 million are required to register for VAT.
Businesses must apply a 5% VAT rate to most goods and services supplied in Dubai.
Those wishing to set up a business in Dubai and register for VAT can use our local agents.
Assistance with VAT registration in Dubai
Foreign investors wishing to register for VAT in Dubai need to appoint a local representative and our advisors can negotiate with the authorities on their behalf. We can also deal with various accounting issues for your company in Dubai or any other free zone. We can also help you register your company in one of Dubai’s free zones.
This video gives an overview of the implementation of VAT in Dubai.
VAT implementation in the United Arab Emirates
The UAE government regularly introduces regulatory mechanisms and frameworks for all government departments and industries as part of key initiatives to make the economy healthier. A representative of our company, which helps entrepreneurs start a business in Dubai, says that one of the most important measures is the introduction of value-added tax (VAT) in the UAE.
In 2018, the Gulf Cooperation Council (GCC) countries introduced VAT and major economies such as the Kingdom of Saudi Arabia and the United Arab Emirates have adopted and implemented the legislation. For the general public, this means paying more for entertainment, food, cars and other product categories.
For businesses, it means that VAT will be charged on goods and services at all stages of the business process, from raw materials to the finished product. It should be noted that VAT not only affects businesses operating on the mainland but also has complex implications for businesses in the free zones. The overall VAT system is designed to simplify macro and microfinance compliance for all businesses in the UAE.
The UAE government has adopted a welcome policy of an advisory and educational role in ensuring business compliance with the VAT regime. However, in 2019, the calendar year of VAT implementation, it has adopted a somewhat more stringent compliance framework.
This particular approach is intended to serve as a model for VAT implementation in other GCC countries where the concept of taxation is relatively new. The government is to be commended for the smooth implementation of VAT, as evidenced by the overall compliance rate for all businesses in the UAE, which exceeds 90%.
In 2018, government VAT revenue reached Dh27 billion, exceeding the targets of Dh12 billion for 2018 and Dh20 billion for 2019. Needless to say, this is one of the UAE government’s largest sources of revenue in monetary terms.
While the public readily accepts (and plans for) VAT as a final consumer and the increase in prices of consumer goods and services, businesses are concerned about regulatory mechanisms, rules, powers and potential penalties.
We offer our clients valuable VAT advice and a comprehensive range of VAT services, from VAT health checks and VAT registration to ongoing tax filing, compliance and advisory services. We believe that our clients not only need to be prepared and able to comply with VAT requirements, but they also need to be able to turn this into a competitive advantage with the right VAT service strategy.
Protecting
VAT and the services subject to it are a relatively new concept in the Middle East, but VAT has been used in other parts of the world for decades. With VAT systems, regulations and procedures spread across the globe, we recommend that you take VAT seriously and preferably work with a professional advisor who has global experience. A good starting point is to conduct a VAT health check (VAT readiness) for your business. We can also assist you with setting up a business in Dubai.
Our services: VAT registration
Whether you need VAT or GST registration services in UAE 2022 or elsewhere in the world, our comprehensive and efficient services cover your needs with a minimum of hassle.
VAT registration requires a good knowledge of local tax laws and procedures as well as adequate language skills. Any deviation from these basic principles will result in many applications being rejected.
To minimize the complications of registration, many businesses choose to use the services of a specialist VAT tutor who will assist them throughout the registration and compliance process.
Our dedicated team of VAT advisors offers multilingual assistance to help you obtain a VAT number in a short time:
Free VAT registration assessment,
Advice on deadlines and types of registration,
Advice on document and information requirements,
Translation services if needed,
Examination of all relevant registration documents,
Preparation and submission of all application forms,
Creation of online filing portals,
Carrying out all correspondence with tax authorities.
VAT compliance and reporting
Once registered, our team of VAT advisors will file quarterly or monthly VAT returns, based on compliance with mandatory statutory returns in accordance with government guidelines.
Once you are registered for VAT in the UAE, you are required to file mandatory returns on a regular basis in the form of quarterly or monthly VAT returns. This is a simple summary of all transactions carried out by your business in a given period that require VAT compliance, whether they are financial or reporting transactions.
Each VAT return is different and has different information requirements and reporting formats. Our team of advisers has information and advice on filing VAT returns in the UAE and can help you set up your business in Dubai.
VAT advice
As global VAT requirements vary from country to country and regulations change frequently, we are not only fully aware of these changes but also offer VAT consultancy services with practical support for your business.
When companies do business with multiple entities around the world, it becomes difficult to keep up with changing VAT obligations. It is important to hire a VAT services expert to guide you through all VAT jurisdictions.
Why choose us?
In-depth knowledge of VAT legislation.
Single point of contact for all jurisdictions
Global presence
Process consistency
A solid track record
Flexibility of services
Individual approach
Multilingual team
Cost-effective solutions.
If you are interested in setting up a company in Dubai, contact the founders of our company who will provide you with detailed information about setting up a company. You can also rely on us if you want to set up a company in Dubai or register for VAT in the UAE.
