Name: KGRN Chartered Accountants
Brand: KGRN
SKU: KGRND1
Rating: 4.9 (84 reviews)

Eligibility, Registration, and Compliance

The Federal Tax Authority (FTA) introduced VAT in the UAE on January 1, 2018. Since then, the corporations have been required to comply with tax accounting and maintain a clean tax record. The VAT applies to a variety of industries in the UAE that sell taxable goods and services. Although corporate businesses are not concrete goals, consumers must face the tax burden. For example, the firm is responsible for collecting and accounting for taxes on its goods and services. As a result, VAT registration is an important aspect of operating a business in the UAE.

As a result, the business acts as an agent to collect the indirect taxes owed to the government. Furthermore, the FTA directs VAT legislation, while the Federal Audit Authority (FAA) oversees audit authenticity.

VAT is a relatively new tax in the country, despite the fact that it has long been used in over 150 countries throughout the world. Thus, auditing is becoming increasingly popular in the country.
According to FTA norms, the normal VAT rate is roughly 5%.

VAT Eligibility:

The implemented VAT system contains certain guidelines that make a few businesses liable to the taxation, while others are exempt. The criteria are essentially based on the turn-over generated and a few other rules that resonate with the Double Taxation Treaty (DTT).

Companies whose import and taxable articles exceed 375,000 AED must pay VAT.
Companies whose supplies and imports surpass 187,500 AED can decide what to do on the same.
The government recompenses a company on the funds that the company remunerated to its dealers and traders. This ensures a rather welcoming business milieu.
Although the Free Zone License comes with a varied amount of benefits, the establishments in the zone are still liable to the payment.

Documents Required for VAT Registration in UAE:

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 endeavour accounting 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 in UAE is done via the online platform of the Federal Tax Authority (FTA). The establishment must create an account on the platform and upload the above-mentioned documents for initial registration.

VAT is based on the various turn-over thresholds, there it is important to indicate the category of businesses under which the establishment falls during the registration.

After the registration, the Federal Tax Authority will issue the Tax Registration Number (TRN) within three weeks.

Tax Residency Certificate:

Trending Service

E-Invoicing UAE - Peppol E-Invoicing System Will Writing Services in Dubai, UAE for Muslims and Non-Muslims Business Valuation Service Dubai Mainland Company Formation Setup in Dubai ICV Certificate Service Dubai

Tax Residency Certificate is an eligibility proof for the establishment to receive a tax exemption under the Double Taxation Treaty (DTT).

The DTT is designed to appeal to foreign investors or businesses planning to establish themselves in the UAE which would complement the cash flow in the country and creates a business favorable environment.

The aforementioned tax exemption can be appealed by the foreign investors who are already accountable to pay taxes in their respective nations and jurisdictions and enables them to claim a 100% tax exemption.

Tax Residency Certificate/Tax Domicile Certificate is issued under the authority of the UAE Ministry of Finance only after confirming the eligibility of the applicant as per the norms of the Federal Tax Authority. Also, the Tax Residency Certificate holds validity only up to a year.

The eligibility criterion demanded by the FTA include that:

The company must be functioning in the Mainland.
Additionally, a branch of a foreign company or an offshore enterprise is not eligible for the exemption
A Free Zone company can be an applicant for the certificate.
Proof of employment or investing proficiency must be produced.

VAT Liability and Compliance in UAE:

The concept of Output Tax and Input tax governs the scenario of a company that is liable. Also, the Output tax indicates the VAT charged on the goods and services of the establishment which is owed to the government within the stipulated tax period. Meanwhile, the Input tax indicates the VAT charged on the procurements made by the establishment within the same tax period.

If the output tax surpasses the input tax, the establishment is liable to pay the difference to the FTA. Likewise, if the case is vice-versa the establishment can recover the excess input tax against the subsequent payment to the FTA.

The companies are accountable to file VAT within 28 days after the allotted ‘tax – period’.

For establishments procuring a turn-over up to 150 million AED, the tax period is quarterly.
For establishments obtaining turn-over more than 150 million AED, it is monthly.

A FEW PENALTIES AS – ISSUED BY THE FTA