VAT in UAE: Basic guide for new business

All business including new businesses in UAE is affected by the implementation of VAT. Here is the guide to help new business owners in UAE to understand VAT.

What is VAT?

Consumers pay a small amount of money on goods and services in addition to the original price. This amount is collected by businesses and returned to government, is known as VAT. The government uses this money to provide better public services to the people.

In addition, VAT is an indirect tax that is collected at each step of the supply chain.

However, businesses need to register in UAE to charge VAT.

What are VAT Rates in Dubai, UAE?

The VAT rate in Dubai, UAE is 5% for most goods and services.

However, there are also other categories such as exempted or 0% tax categories.

Who needs to register for VAT?

There are two types of VAT registration in UAE namely

1. Mandatory Registration

• It is compulsory of business with total revenue greater than AED 375,000 to register for VAT in UAE.

2. Voluntary Registration

• Businesses in the UAE with total revenue greater than AED 187,500 can also apply for voluntary registration

How to register for VAT?

VAT registration is the process to file your business record with the government which will enable you to submit VAT returns. Without it, you will not be able to charge VAT on any sale of goods and services.

UAE government has provided an online portal for registration. You need to create an account and verify it. After that, you complete the VAT registration and attach the requested documents. It usually takes 21 working days to get the results.

Who can register as a VAT group?

If a company has multiple entities that trade with each other, it is possible to

When there are multiple entities within a company and the transactions take place between them, they can register as a VAT group.

The group registration helps all the entities to be identified as one entity for matters that deal with VAT. The group receives one TRN number for identification and file VAT returns.

When one entity trade with another within the group, no VAT transaction takes place. On the other hand, the group must not disregard VAT when dealing with companies outside the group.

How New Business should deal with VAT in UAE?

The introduction of VAT has led the business to focus on a strong accounting framework. Improper and incomplete accounting systems will result in a VAT penalty from the Federal Tax Authority.

All businesses are required to follow the format of TAX invoice, credit notes, and dept notes, etc. stated by VAT Authority in UAE.

Note: It is mandatory for all VAT registered businesses to keep the accounting records for at least five years from the transaction date.

How VAT Consultants in Dubai, UAE can help new businesses?

VAT consultants in Dubai can help you understand VAT law and implement it in your business process. We would like to recommend HAY Consultants, known for their professional accounting services in Dubai. Here are the list of services provided:

• VAT registration
• VAT return Filing
• VAT refund
• VAT implementation

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