Value Added Tax (VAT) has been the most recent addition to the taxation laws in the UAE. VAT was introduced on the 1st of January 2018 and has been fixed at the rate of 5%. The TRN is also closely associated with VAT Registration in the UAE.
The taxation is applicable to the various goods and services propagated by the business enterprises in the UAE and is collected and accounted for by businesses from the consumers who favor these goods. This is an indirect form of taxation that contributes to the government’s revenue.
The Tax Registration Number (TRN) serves as an identification number. It helps various establishments proclaim their credibility after VAT registration. It is fifteen digit number issued by the Federal Tax Authority that accounts for the liability of various companies to pay the VAT, tracks their records, and ensures compliance with the authorized guidelines.
VAT registration is the key to obtaining a TRN number. Also, VAT registration and TRN issual is a complementary process. For instance, if one registers for VAT the applicant will receive a TRN number after the registration.
TRN – Implications and Points to ponder:
TRN is the identity of accountability and compliance of each business that is eligible to emolument the VAT.
a) The TRN is unique for each company and comprises a 15 digit number issued by the FTA.
b) The company that has not received a TRN cannot charge and collect VAT from its consumers.
c) After a company gets a TRN, it must exhibit this number on its documents that comprise VAT returns, Tax Invoice, Credit notes, and all financial documents.
d )The TRN would provide the FTA with an exclusive right to maintain a record of the companies’ financial liabilities and returns.
e) Lastly, on the collection of VAT from the consumers, the account must be specified on the Returns and must be paid to the authority.
Documents Required for VAT Registration:
- Firstly, the company must submit Emirates ID of the proprietor or the stakeholders of companies
- Photocopies of Business Trade License or Commercial License
- Passport copies of the proprietor or stakeholders of the company as deliberated on the license
- Memorandum of Association (MOA)
- Company Address Proof
- The Establishment’s Representative Contact
- Company Bank Details including International Bank Account Number (IBAN)
- Details of other establishment owned by the concerned proprietor or stakeholders of the company
- The income report for the preceding 12 months attested by the proprietor or the manager
- A detailed account of any export or import undertakings carried by the establishment.
- A photocopy of the Dubai Custom Code Certificate
- An attested list of all GCC countries the establishment has business relations
- The establishment is also liable to produce a detailed account of their business for the preceding 5 years with all necessary milestones.
- If the company is dealing with any custom department that must be mentioned along with the
- VAT registration letters.
- If the establishment represents more than one enterprise then the establishment must specify if they would like to have one tax group number or they would like a separate number for each enterprise.
VAT Registration:
VAT registration can be done online on the provided portal by the Federal Tax Authority (FTA). As per the FTA’s demands, the establishment must submit the aforementioned documents during VAT registration.
The registration implies that the company will be receiving a unique TRN number which would govern its record of taxation.
The establishment will receive the fifteen digit unique TRN within 3 weeks of the registration.
During registration, it is important to mention the turn-over of the company as the VAT varies with different income thresholds.
The company applying for the TRN has more than one establishment under its administration then the company must indicate whether they require a single number for the whole enterprise or a unique number for each establishment.
TRN Validity and Identification:
There have been accounts of issues where companies (generally small-scale) have used fake TRN on their invoices or have collected VAT without a TRN on the invoice.
Legal bodies condemn such manipulations for hoarding unlawful profits, and even view it as a serious offense.
- Firstly, the invoice or receipt issued to the consumer during a sale or endowment of service must clearly mention the name of the recipient of the sum, the address of the company, and the provided TRN.
- Furthermore, the establishment must label the invoice using a unique serial number to track the order of the service delivered.
- Additionally, the invoice must also mention the date of the sale or delivery of the service.
- The VAT for the delivered service must be evidently provided on the invoice.
- Lastly, if the consumer or any authority feels the necessity to check the authenticity of the enterprise they may do as follows:
They may visit the FTA portal – www.tax.gov.ae. The portal will contain a tab to enter the specified TRN as on the invoice. On submitting the query TRN in the tab, if the TRN is valid then the allowed details of the enterprise will be provided in English and Arabic. Also, it identifies and verifies the enterprise as a legally valid entity.
The proper validation of the TRN is necessary for the proper filing of the VAT and the validated procedures ensure the well-being of the consumer and lawful ensuing of the business establishments. Therefore, make sure you get your VAT Registration right, by partnering with us, at KGRN.
For more info please contact :
Contact Person: Gopu Rama Naidu CPA FCA
Email: [email protected] Mobile : +971 50 452 0648 Phone: +971 455 70 204
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