Value Added Tax (VAT) had been the latest addition to the taxations in UAE which was implemented on the 1st of January 2018. While various jurisdictions have different guidelines and exemptions regarding personal tax and company taxes, VAT had more or less uniform implementation throughout the UAE. Therefore, to establish a successful business in the UAE, companies need to get their VAT registration in place. 

Value Added Tax had been introduced to boost the revenue income of the government and thus improve the infrastructural amenities and economic build of the nation. The companies are liable to complete their VAT registration, UAE, and comply with the payment procedures, the result of which can be advised after the statutory audits or internal audits because the time duration allotted for enterprises varies depending on the capital scale on which the establishment operates.

The companies registered for VAT can charge the consumers of their service and products. However, for the same, the money received must go to the government in the form of remittance. The amount that companies have to pay varies depending on the output and input difference. Additionally, other factors that determine the payable amount include allotted exemptions based on this difference.

The taxation is indirectly aimed at the public as the company is not directly liable to pay it out of their standing funds. Nonetheless, the price hike must be planned considerately, concerning the loss of consumers. But the uniform taxation does not hold rather grave disparities and keeps the market competitiveness standardly the same.

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Legal Themes:

The VAT has been applicable invariably across gross consumerism, nevertheless, some services that are exempted considering various parameters that may indirectly refer to jurisdictions, necessities, revenue, etc. The VAT services or various CA firms can help the company’s get familiar with the parameters and procedures. In this case, the list of services and merchandises that can claim a 100% immunity from taxation are listed as follows:

  1. All consumer services or merchandise that are subjected to export outside the Gulf Cooperation Council (GCC).
  1. Transportation concerned with International courses and all services aiding international transportation.
  1. Supplies and services regarding the aircraft and ship conveyance and some sectors of the respective sea and land transportation.
  1. Metals that are certified as a high-grade investment involving exquisite metals such as gold, silver certified of purity up to 99%.
  1. Residential properties and housing services that have claimed service for the first time within a minimum interval of 3 years
  1. Educational services and all allied merchandises and corresponding services are supportive of Education.
  1. Health care facilities and amenities and all allied merchandises and corresponding are services supportive of healthcare.

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VAT Eligibility and Issued Threshold:

The FTA sorts out which companies are liable to pay VAT via a fixed threshold limit. Moreover, the federal decree-law no. 8 regulates the threshold limit and has the current fixed rate as:

  • Primarily, establishments whose gross turn over exceeds 375,000 AED, inclusive of all their imports, profits, and sales of taxable items. Are liable to comply with the payment of VAT fixed at 5%.
  • The establishments whose gross turn overlies somewhere in between 187,500 AED and 375,000 AED can decide to whether they want to comply or exempt themselves from paying and filing the VAT returns. In this case, the profits are all-inclusive.
  • The government recompenses or reinstates a certain amount if the company’s out gross does not exceed its input. The exemption occurs in such situations where the financial statements do not concede with the viability of such taxation and can cause undue pressure on the business.
  • Free zones are necessarily liable to VAT just like other jurisdictions. Furthermore, all the exemptions are under FTA guidelines, and none of the thresholds has any gross variance.

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VAT De-registration:

Considering the 12 months the company can analyze its turn over pattern. If under given circumstance the company fails to procure a turn-over of more than 187,500 within 12 months, the company can apply for deregistration from VAT within 20 days. Moreover, if the establishment fails to apply for the deregistration they are liable to the payment of a penalty of 10,000 AED.

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Documents Required for the Registration:

  • ID issued by the Emirates to the owner or the patrons of companies 
  • Photocopies of Business Trade License 
  • Passport copies of the manager or shareholders of the company as reflected  on the business license
  • Memorandum of Association (MOA)
  • Company Address Proof
  • The Establishment’s  Representative’s 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, including an attestation by the proprietor or the manager.
  • An account of any export or import undertakings carried by the establishment. 
  • A photocopy of the Dubai Custom Code Certificate 
  • An inventory list of all GCC countries the establishment has business relations
  • Generally, the applicant must also deliver documentation accounting for all the business activities undertaken by the company for 5 years and all the financial records of the respective endeavours.
  • The establishment must mention if they have any association with port functionaries or departments, through the VAT registration letters.
  • Lastly, 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.

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The Process

The registration process is relatively easy and requires no complex process. So then, let us take a look at how to acquire the registration and the corresponding TRN after the registration.

  1. To register for VAT, applicants must make use of the FTA online platform. Open the online portal of FTA.
  2. Sign up for a new account or sign in if already having an account. Enter the valid email address and other details as described and submit.
  3. Enter your designated account and apply for the registration of VAT.
  4. Generally, within three days of applying, the FTA approves a registration. After this process, the company receives its unique TRN – Trade Registration Number.
  5. The notification of approval comes as an SMS or an email to the company along with TRN.
  6. It is important that the company uses the TRN on their invoices.
  7. Additionally, they must also always use their designated TRN for identification and authorization.

The VAT registration time period usually stands between 3 to 5 days. Various VAT registration consultants can help companies with the process. For the most part, the VAT registration process in Dubai and the VAT registration process in Sharjah are not variable to a large extent. As a result, companies are able to work in both jurisdictions and make the necessary arrangements accordingly to help your company register. 

The KGRN CA firms can help the establishment with VAT consultations Dubai with their invariable and proficient expertise. They have well-established services in Dubai, Sharjah, and Abu Dhabi which can help out with VAT registration Dubai and Vat registration Sharjah. Therefore, reach out to us, at KGRN, to ensure you never face any difficulties with your VAT registration.

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