Value added tax in the UAE – It’s time to act

With Value Added Tax fast approaching, businesses cannot afford to delay the process of becoming VAT compliant much longer. The first step towards this is registering for VAT and failing to do so prior to the deadline comes with a substantial penalty.

So, who needs to register for VAT?

If you operate a business registered in the UAE and are generating annual revenues from the taxable supply of goods or services in the UAE in excess of AED 375,000 in the last 12 months, or you expect to exceed this annual threshold in the next 30 days, you are obliged to register for VAT.

Businesses falling below this threshold, but generating annual taxable supplies and imports in excess of AED187,500 or expect to exceed this annual threshold in the next 30 days, may voluntarily register. Those incurring annual expenses subject to VAT that exceed AED187,500 may also voluntarily register.

If your business does not fall into the mandatory or voluntary registration categories, you will not be able to claim VAT paid on your expenses. Compliance obligations for businesses who choose to register voluntarily are exactly the same as for those businesses that are obliged to register.

Businesses can register through the FTA’s (Federal Tax Authority) online registration portal. The FTA have recently published dates for businesses to get VAT registered by, as below:

·         31 October 2017: Turnover in excess of AED150 million

·         30 November 2017: Turnover in excess of AED10 million

·         4 December 2017: All other businesses

It takes up to 20 working days for a Tax Registration Number (TRN) to be issued and anyone registering after this date might not be registered when VAT goes live on 1 January 2018. If a business is required to register (mandatory registration) and fails to do so, they will be in contravention of the VAT legislation. Infractions such as this will come with fines.

If you are a Virtuzone client, we can provide assistance with the VAT registration of your business. Please send your query to vatreg@vz.ae and we will respond with more information. Kindly allow us two-to-three business days to respond due to the high volume of communication that we are receiving for this service.

Next Steps:

In addition to getting VAT registered you are also required to:

(a)    become VAT compliant and;

(b)   implement and ensure you have the proper accounting system in place.

Argent Gulf Consulting can take you through the important details of the VAT rules and regulations and also assist you with maintaining proper accounting records going forward.

If you are interested in finding out more, email us and we will put you in touch.