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VAT Value Added Tax - Presentation on Key Concepts and Knowledge
UAECA, FCCA, CIA, M.Com, Bsc (Hons.)
Managing Partner at Push Digits Chartered Accountants
VAT Registration Services
It is compulsory for all the companies and individuals having annual turnover of DH 375,000 or more to register for VAT in the United Arab Emirates.The UAE government implemented VAT from January 1, 2018. All individuals and companies meeting the above mentioned threshold limit must register for VAT to continue conducting business activities in any emirate of the United Arab Emirates.
In UAE, the registration process for VAT is an online one and anyone that wants to register for VAT can visit the online portal of the Federal Tax Authority (FTA) and can start the VAT registration process.There are a number of aspects which the applicant should consider before proceeding with the VAT registration process like whether to opt for mandatory registration or the voluntary one, register as a standalone or part of a Tax Group etc. If you want to register for VAT then visit FTA’s online portal https://eservices.tax.gov.ae/en-us/ and start the VAT registration process.
Documents that are required to be provided for VAT Registration by the FTA:
- Company’s Certificate of Incorporation
- Company’s Memorandum and Articles of Association
- Power of attorney (if any)
- Copy of company’s Trade license
- Copy of the authorized signatory’s Passport
- Copy of Emirates ID of the authorized signatory
- Financial Statements/ audit report / annual turnover detail
- Supporting documents relating to customs registration (if applicable)
Information that is required to be provided to the Authority for VAT registration in the United Arab Emirates:
- Details regarding the entity’s business activities
- Projected turnover for the next 30 days
- Turnover details of last 12 months as well as invoices to support the provided detail
- Estimated value of exports for one year to each GCC member state
- 5. Estimated value of imports for one year from each GCC member state
- Whether the entity is expected to conduct business with GCC suppliers or customers
- Details relating to entity’s bank account.
Registering for VAT as a Tax Group
In UAE, a number of companies operate business activities with multiple trade licenses and as part of one group.Many a times companies registered for conducting business activities in various parts of the United Arab Emirates well as registered with different professional associations or government authorities come together to form a VAT Group. The entities wanting to register as a VAT Group must satisfy the following conditions:
- All the companies to the Tax Group must have their head office or a representative office or a branch office with license in the United Arab Emirates.
- The entities to the group must be related to each other.
- The structure of the VAT group should be formed in a way in which either one entity/ person or more than one entity controls all the other entities of the group.
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If an entity/person does not have shareholding in all the other companies of the group but still has control over those companies through power/letter of attorney then in such a scenario that entity/person would be classified as a related party of all those companies for VAT Group purpose and therefore can opt for the VAT Group option.
Furthermore when different entities decide to register for VAT as a VAT Group thenin that case all the group entities will be required to provide evidence of not only the structure of the VAT group showing the shareholding and controlling structure but also a resolution approved by the board of each member company of the group.The resolution should state that the group has appointed an entity (Member Company of the group) as s its representative for the purpose of registering for VAT in the United Arab Emirates.
Important factors to consider when providing bank details for VAT registration purpose
If a company is registering for VAT as a standalone then in that case that company can provide details of one of its bank accounts in the United Arab Emirates.The entity is required to provide details such as the bank name, name of branch,account title etc.
If two or more entities want to register for VAT through the VAT group option then even in a scenario like this the details of one of the two entities single bank account (preferably a joint account) would be enough to meet the VAT registration requirement in relation to bank account details. The details of bank account to be provided to the authority should be that of the Tax group representative.
Is Arabic mandatory for submitting the VAT registration application or English can also be used for this purpose?
The application for VAT registration can be submitted in English but even then the applicant will be required to provide information in three columns of the application form in Arabic. The information that is to be provided in Arabic includes:
- Company name
- Manager name
- Authorized signatory’s name
Turnover calculation for the purpose of VAT registration
The turnover threshold for registering for VAT in the United Arab Emirates is DH 375,000 or more in case of mandatory registration and DH 187,500 or more but not in excess of DH 375,000 for voluntary registration.
The supplies that should be considered while arriving onto the threshold are as follows:
- Supplies to customers on which VAT is charged using Standard rate of 5%.
- Supplies to customers on which VAT is charged at zero-rate.
- Imported Goods
- Reverse charge services
It should be noted that supplies exempt from VAT will not be treated in the calculation of turnover for VAT registration purpose.
What support Push Digits can provide you with regards to registering for VAT in the United Arab Emirates?
We Push Digits have a separate division that deals with the tax related issues of our clients conducting business activities in any emirate of the United Arab Emirates. We have a team of qualified tax professionals that handle the VAT-related issues/ queries of our clients and in addition to this we also have a separate wing which provides our clients with registration services in relation to VAT all across the UAE. We provide our clients with guidance and complete support with regards to VAT registration in any emirate of the United Arab Emirates.
In the first phase of VAT registration, our VAT registration team would need all the required information/documents necessary for VAT registration in the United Arab Emirates. You can provide the said details through e-mail. We require the documents / information in soft form because the registration process is to be completed online so therefore we do not require the hard copy of the documents.
Once you provide us with all the required information / documents deemed necessary for VAT registration in the United Arab Emirates and also give us green light to move ahead, we will start the VAT registration process in the FTA’s online portal with your e-mail ID. Once the application form is completed and checked by the senior partner/ tax manager it will then be provided to you so that you can review it before giving the approval with regards to submitting the application to the Federal Tax Authority. The form will be submitted to the tax authority only after we get final approval from your side to submit it. Once the form is submitted only then the tax authority will start processing the form submitted and once the process of verifying the details mentioned on the application form is completed by the tax authority only then then it will contact you to confirm the VAT Registration Number that has been given to your company.
In addition to providing VAT registration services, we also provide our clients with services such as VAT Implementation, VAT Consultancy and VAT advisory all across the UAE.