VAT Registration Process in UAE: Things to Know

VAT or value-added tax is a type of consumption tax that is added on a product at each stage of a supply chain where value is added. It is based on the increase in the value of a product or service from production to the point of sale. The VAT is assessed and collected at each stage; a customer or user pays VAT on the final cost of the product and is collected by the end retailer.

Who needs to register for VAT?

VAT registration is required for a business entity whose annual turnover exceeds the VAT registration threshold value in their respected countries decided by the federal tax authorities. In UAE, it is mandatory for the companies or individuals who operate a business in the country and have an annual turnover of more than AED 375,000. VAT registration is a mandatory process to avoid any fines that’s why a new business needs to keep an eye on their turnover to know if they’re approaching the VAT threshold.

If your annual turnover is below the VAT registration threshold, you can still voluntarily choose to register your business. This will help you grow your business with a positive impression and intent. Although, once you have registered for VAT, you will have to charge VAT (output tax) on your services or goods that your business offer, it will also allow you to reclaim VAT (input tax) on purchases you make that you are charged by other businesses.

VAT Registration Process

VAT is the most common taxation system adopted by more than 160 countries around the world. Almost in all countries, any business can register for VAT through an online process. Any business representative can register for value-added tax (VAT) on the Federal Tax Authority’s online portal in their respected countries where the business is operative. In UAE, VAT registration is free of charge and can be done 24/7 through the FTA website. Here’re the three simple steps to follow while registering for VAT:

  • Go to the FTA website’s e-Service portal and create an account by clicking on the ‘Registration’ button.
  • Verify your account via the email sent to you on registered email-id and then login to your account.
  • Now fill the VAT registration form with all the mandatory credentials and submit for approval.

Make sure to provide accurate information and data that you can submit for verification. Scanned copies of all the required documents must be attached with the application form to complete the registration process.

Documents Required

You have to upload the soft copies of the required documents along with the application. You will need the following documents before registering for the VAT:

  • Business or Trade License
  • Passport/Emirates ID (for UAE residents) of the owner of the business and the authorized signatory
  • Proof of authorization (certificate of incorporation, articles of association, power of attorney)
  • Details of bank account and other documents to describe business activities

Consult with a business consultancy or any tax expert before applying for the VAT registration. He will explain every detail of the VAT registration process and documents required as per the country’s taxation system wherever your business is operative. VAT registration is very important for any business to grow it and if your annual turnover is more than the VAT threshold, it is mandatory to avoid any fine under tax regulations.

Dubai Free Zone Business Setup: Reasons You Should Opt For It!!

The Dubai free zone- also called free trade zones are typically the economic areas where goods and services are traded at custom rates and preferential tax. They were started originally to enhance the international business in the UAE region by offering advantages such as 100% company ownership, and today, there are more than 40 free zones across the UAE. 

Steps involved in a free zone business set up:

Setting up a company in a free zone is comparatively easier, as the authorities require less paperwork and duration. Mentioned below are the key steps to start a business in a free zone. 

  • Identify the type of business you want to set up
  • Select a suitable trade name
  • Register for the business license
  • Locate an office space
  • Get the pre-approvals, get the license, and register your business

While the easy setup process may be one of the factors that make free zones famous, there are many more reasons why so many entrepreneurs migrate to the UAE to set up their business. Some of the major reasons are as followed. 

  • Foreign ownership:

Apart from the easy setup process, another reason why people consider setting up their business in a free zone is foreign company ownership. Most foreign entrepreneurs willing to set up their business in the UAE mainland have to work with a local partner to do business. But, this isn’t the case with a free zone business setup. The Dubai Free Zone Business Setup allows you to set up a company with 100% ownership. 

  • Full privacy protection:

Free zones are particularly famous among entrepreneurs as there are no open directories or other open details of company ownership, and confidential information including shareholder details. All this information is never disclosed to the general public. 

  • Tax and duty:

This is one another very compelling reason to consider Dubai Free Zone Business Setup. By setting up your company in a free zone and benefiting from 0% personal and corporate tax, your business will be also exempted from the VAT. Also, your business will exempt from export and import too and trade with absolutely no currency restrictions.

A few more reasons include:

  • Amazing office infrastructure for any type of business
  • Investors will benefit from a 3-year visa
  • You can hire staffs and employees without the interference of the UAE labor legislation
  • No taxes
  • Investors can sponsor their family

So, for Dubai Free Zone Business Setup, all that is required is a few hours of your effort and some common paperwork, and you could successfully be trading from a Dubai free zone and gaining all the advantages. 

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