VAT Registration in Dubai
VAT Registration In Dubai: What You Need to Know
VAT (Value Added Tax) is a consumption tax imposed by the central government authority on the sale of certain goods and services to consumers. VAT is a tax that is paid by businesses that create products and services, but they ultimately charged it to consumers when they pay for the goods and services.
VAT is an indirect tax charged on consumption, not on income. Dubai government charges 5% VAT on most goods and services, but some are exempted or have a 0% rate if they meet certain conditions.
More than 160 countries practice the VAT, and the UAE adopted it on January 1, 2018. Owners can start applying for VAT registration three months before the launch (October 1, 2017) in the UAE.
What Is Subject To Tax?
For non-essential consumption products, a VAT would be required. Anything else, except necessities like food and clothing, would be subject to this tax category. This includes
- Tobacco products and carbonated drinks
- Electronic smoking devices and energy drinks
- Sweetened drinks, automobiles, jewellery, and entertainment.
What Will Not Be Subject To VAT?
The UAE authority stated 100 categories that are exempt from VAT, which include
- Financial insurance (life insurance and reinsurance)
- Education, health, bicycles
- Fuel, bare land, local passenger transport, and social services
- Transportation services include international, aircraft, and sea.
- The residential supply services
How Do I Register My Business For VAT In Dubai, UAE?
Registration for VAT is pretty simple and easy; just follow the following information:
- Access the UAE Federal Tax Authority website online.
- Create an E-service account.
- Login into an account and start filling out the VAT registration form.
- Complete all sections of the form.
- Fill in all the details about the applicant.
- Fill in your contact and banking details.
- Explain the business relationship
- About VAT registration and declaration
- Before submitting, review it and then submit it.
Is VAT Registration Necessary In Dubai?
Yes, it is a mandatory procedure to register your company with the UAE government as being involved in production and sales.
A firm that is registered under the VAT regulations is recognised by the government as a provider of goods and services and is permitted to charge consumers VAT and submit that VAT to the government.
A firm being registered under VAT is permitted for the following:
- Regular submission of the VAT return.
- Apply VAT when providing taxable products and services.
- Pay VAT to the government.
- You can claim an input tax credit for the VAT paid on your purchases, and subtract it from the VAT due on sales.
Registered firms must comply with legal reporting structures, along with other requirements.
You must keep records like bookkeeping, tax documents, invoices, and credit notes.
What Are The Document Requirements For VAT Registration In Dubai?
- A copy of your approved business licence
- The passport copy of the owner and shareholders in the case of companies
- All detailed information about the company’s representative (contact details).
- Registered address proof of the company in the UAE.
- Information about the corporate bank account with the 12-month income statement.
- Inform me about the import and export activities of the company.
- A projection of anticipated earnings, sales, and costs for the 30 days after the registration for VAT.
- Details regarding the Gulf Cooperation Council regions where the corporation conducts business
- A comprehensive overview of the company’s business history during the last five years.
- Memorandum and article of association.
Free Zones That Are Exempt From VAT In The UAE
20 free zones in the UAE will be exempt from VAT, according to a January 10 FTA announcement. The term “designated zones” is used to describe them.
Instead of places like Dubai Media City or those that deal with financial services, the areas covered are mostly walled off free of charge with strict regulations on commodities.
The following list consists of those free zones in the UAE:
In Dubai
Dubai Airport Free Zone (DAFZA), Dubai Textile City Free Zone Area in Al Quoi, Jebel Ali Free Zone (JAFZA), Dubai Cares and Automotive Zone (DUCAMZ), Dubai Aviation City.
Umm Al Quwain
Umm Al Quwain Free Trade Zone on Sheikh Mohammed bin Zayed Road and Umm Al Quwain Free Trade Zone in Ahmed Bin Rashid Port.
Abu Dhabi
Khalifa Industrial Zone (Kizad), Free Trade Zone of Khalifa Port, and Abu Dhabi Airport Free Zone.
Ajman-Ajman Free Zone
Sharjah
Hamriyah Free Zone and Sharjah Airport International Free Zone (SAIF Zone)
Fujairah
The Fujairah Free Zone and Fujairah Oil Industry Zone (FOIZ)
Ras Al Khaimah
RAK Maritime City Free Zone and RAK Free Trade Zone RAK Airport Free Zone.