Can anyone —natural or legal—apply for VAT registration in UAE? It is not a proper query to ask, though. Because a person's eligibility to register for VAT is contingent upon their taxable purchases or outlays during a specific time frame. People must register for VAT or be able to do so based on taxable supplies or taxable expenses. They must add VAT to their taxable supplies once they have registered for VAT. However, based on the standard input tax recovery rules, only taxable persons (individuals who have registered or are required to register for VAT) can claim input tax.

What is VAT in Dubai: Understanding the Basics and Registration Process

Value Added Tax

(VAT) applies to goods and services sold in Dubai as an indirect consumption tax. The final consumer who purchases the products or services on which VAT is imposed bears this tax. Companies selling these goods or services are responsible for collecting and returning the tax to the government. If you wish to learn more about VAT and its registration process in Dubai or any other emirate of the UAE, then our local agents can provide detailed information.

According to Cabinet Decision No. 46 of 2020, individuals are considered; outside the state; and fall under the 0% VAT rate for the export of services if they have a short-term presence in the UAE, lasting less than 30 days.

VAT Exemptions in UAE

Certain goods and services enjoy a 0% VAT rate, which includes:

• Exports
• International transportation services
• Aircraft and sea transportation services
• Investments in precious materials
• Supply of residential properties
• Education services
• Healthcare services

In short, VAT registration in UAE is mandatory for Dubai companies to collect tax. You must satisfy particular requirements in Dubai to apply for a VAT number.

Requirements for VAT Registration in UAE

Tax Identification Number: 

You must obtain this number simultaneously with the certificate of incorporation, which the Dubai Trade Register provides. This number is essential for VAT registration.

Documentation: 

For the VAT registration process, you need to prepare several documents, including:

• Business license for the company (a copy of the trade or commercial license)
• Copies of the passports of the owner and other shareholders (for companies)
• Information about the company representative and contact details
• Proof of the business's UAE registered address.
• Information about the corporate bank account, including IBAN
• Estimation of expected revenue, turnover, and expenses for the next 30 days after VAT registration
• information about the Gulf Cooperation Council nations where the business conducts business
• A detailed description of the company's business experience for the last five years (if available)
• Details about whether the business will be a part of a tax group
• Copies of identification papers with the necessary visas for natural persons

While business owners can complete VAT registration in UAEonline through the Dubai Government's portal, the extensive list of necessary documents and the need to create an online account can make the procedure challenging. Our Dubai business formation specialists can assist you with this process and ensure a smooth VAT registration experience.

Four Factors To Know about VAT Registration in the UAE

1; VAT Registration in UAE: Not all companies need to pay VAT. 

Only businesses with taxable supplies and imports exceeding AED 350,000 annually must register for VAT. You can voluntarily register for VAT if your company's annual revenue is less than this amount but more than AED 187,500. It's essential to seek advice from VAT experts to navigate the complexities of registration and ensure compliance, avoiding penalties and fines.

2; Exempt and Zero-rated Goods: 

Not all goods and services are subject to VAT in the UAE. 

Some fall under exempt or zero-rated categories, meaning either no VAT is applied or taxed at 0%. Zero-rated goods and services still count towards the AED 350,000 threshold, so proper record-keeping is essential. Understanding the difference between exempt and zero-rated supplies is crucial for accurate VAT reporting, making expert advice invaluable, especially for businesses with unique products or services.

3; Stable VAT Rate: 

The standard VAT rate in the UAE is 5%, one of the lowest globally, and there are no current plans to increase it. Therefore, this tax-efficient landscape makes the UAE an attractive business destination. Moreover, VAT specialists can help businesses decide whether to register voluntarily and plan for future costs. As a result, they ensure businesses are well-prepared for VAT implications.

4; VAT-exempt Free Zones: 

Also, for some businesses, VAT registration may not be beneficial. 

Charging VAT to customers who cannot claim it back might make products or services appear more expensive. In such cases, businesses can consider locating themselves in VAT-exempt-free zones to avoid VAT registration and compliance. Besides, tax specialists can analyze the impact of different strategies to help companies to make informed decisions aligned with their goals and tax liabilities.

Wrapping Up 

Except as provided in the UAE Executive Regulation, no person conducting business in the UAE may possess more than one Tax Registration Number (TRN). Therefore, your business needs only one VAT registration, even if it has branches in multiple Emirates. If two or more people are related or involved in the enterprises in a similar way then they are permitted to apply for VAT group registration.

Above all, Emerald has created several business assistance packages to assist UAE business owners in growing and succeeding. Enroll in our internal VAT registration service and our hardworking team will handle your VAT registration and submit your application for a Tax Registration Number.