Every business entity in the United Arab Emirates (UAE) is not required to register for VAT. While some companies are compelled by the Federal Tax Authority to register for VAT, small firms, independent contractors, and freelancers that have not yet reached the statutory VAT registration threshold may choose not to do so. We’ll examine in detail the elements of voluntary VAT registration in Dubai that businesses should be aware of in this post.
Who is Required to Register for UAE VAT?
Businesses that have surpassed the statutory VAT registration level must register for VAT. For a business’s annual supplies and imports, the current obligatory vat barrier is set at AED 375,000. If you anticipate that your company’s VAT taxable turnover and imports will exceed the threshold during the next thirty days or if your taxable turnover and imports exceeded AED 375,000 within the previous twelve months, you must register for VAT.
You don’t need to go through the process mandatorily if your turnover is not anticipated to reach the required threshold for UAE VAT registration any time soon. You can, however, voluntarily register for VAT and take advantage of being a business entity operating in the country that is registered for VAT.
How can I voluntarily register for VAT in the UAE?
If you want to register for VAT voluntarily, you will go through the same registration process that businesses go through for required VAT registration.
Firms can register for VAT using the tax authorities’ website. To receive clearance from the authorities, a VAT registration application must be submitted properly. Any error or mistake might result in fines and/or the application being rejected. Hence it is advisable to apply for VAT registration under supervision of a tax expert.
Responsibilities of registering a business for VAT freely in the UAE
If you have applied for optional VAT registration in the UAE and are accepted, you will assume the obligations of entities that have applied for mandatory VAT registration. In essence, this means that you will:
- Submit VAT returns
- File refunds for VAT (if any)
- Maintain records and accounts for all VAT transactions.
- Pay the FTA-required VAT liability on time
- Charge VAT in invoices as per applicable VAT rate
- Comply with the demands of VAT-registered enterprises.
If your company has registered for VAT, you must abide by the duty to keep VAT records and submit them to the appropriate authorities.
Voluntary VAT Registration in Dubai: Benefits and Downsides
While the majority of businesses find that voluntarily registering for VAT in the UAE is a great alternative, some choose to do so. You must carefully consider the benefits and drawbacks of voluntary VAT registration in Dubai before deciding whether or not to register your company for VAT.
Voluntary VAT Registration Benefits in UAE
Your company would be eligible to get reimbursements for VAT spent on business supplies, which is one of the main advantages of voluntary registration. Additionally, Businesses must register if their yearly taxable revenue exceeds AED 375,000. If you don’t, you’ll simply face consequences and hefty penalties. You have the choice to voluntarily register if your annual taxable turnover surpasses AED 187,500.
Note: To avoid fines and penalties for late VAT registration, enterprises with annual taxable supplies and imports over AED 375,000 are required either to register within 30 days of surpassing mandatory limit or register on voluntary basis
Similar to this, if you plan to register for VAT, you may need to change your company’s accounting procedures and prices for goods and services. When you register for VAT, especially if you do it in advance, you save having to spend time and money completing the necessary changes.
Drawbacks of voluntary registering for VAT in Dubai
The price of the goods or services you supply may appear more expensive to the end user as a result of VAT charges in the invoice.
The fact that VAT-registered entities, also known as taxable entities, assume additional duties such as the ones listed above, is a significant drawback to voluntary VAT registration. This entails keeping all relevant VAT records, submitting VAT reports to the UAE FTA, and retaining all VAT receipts and invoices. Your need to be complied with in terms of administration and bookkeeping.
Exemption from VAT Registration
Businesses are not permitted to register under UAE VAT if the value of their supplies and imports is less than the voluntary registration level of AED 187,500. Additionally, companies that only produce zero-rated supplies are eligible for VAT registration exceptions.
VAT Registration Experts in Dubai
Having a partner to help you manage VAT is crucial if you’re considering registering for VAT, either legally or voluntarily.
It is quite simple to register with VAT Registration UAE and to continue to adhere to all applicable laws and regulations. Even the filing of VAT returns and the accounting and bookkeeping for VAT are assisted by our experts. With decades of experience in the field and a group of knowledgeable, licensed tax agents in Dubai, you can be sure that you are working with dependable and knowledgeable experts.
Are you considering seeking professional assistance? Call or text us at +971 508912062 or send an email to info@shuraatax.com.
