VAT | Amanim Advisors FZC

VAT Registration, Implications, and Tax Return Filing in the UAE

The UAE implemented Value Added Tax (VAT) in 2018. Here's a breakdown of VAT registration, its implications for businesses, and the process of filing tax returns. To ensure you fully understand your VAT obligation, you may contact our tax advisor at Amanim to comply with applicable regulations and file your VAT returns accurately and on time.

VAT Registration:

Who Needs to Register: Businesses with a taxable supply of goods and services exceeding AED 375,000 (approximately USD 102,100) within a period of 12 months are mandatory to register for VAT.
Voluntary Registration: Businesses with a taxable supply below the mandatory threshold can choose to register for VAT voluntarily. This can be beneficial for businesses that incur a lot of VAT-deductible expenses.

Implications of VAT Registration:

Charging VAT: Once registered, businesses must charge VAT on the taxable supplies of goods and services they make. The standard VAT rate in the UAE is 5%.
Claiming Input Tax: Businesses can claim back VAT they incur on their business purchases and expenses (input tax) provided they have a valid VAT invoice. This mechanism allows businesses to act as collection agents for the government.
Record-Keeping: Businesses must maintain proper records of their taxable supplies, input tax, and VAT calculations.
Tax Return Filing: Registered businesses are required to file periodic VAT return forms electronically with the FTA.

person holding pencil and stick note beside table

VAT Return Filing:

Filing Frequency: The frequency of filing VAT returns depends on the taxable value of your supplies. Businesses with a taxable supply exceeding AED 150 million (approximately USD 41 million) per annum are required to file VAT returns quarterly. Others typically file semi-annually.
Information Required: VAT return forms require details such as taxable supplies, input tax, net VAT payable (or refundable), and supporting documentation.
Deadlines: VAT return deadlines are set by the FTA and are typically within 28 days of the end of the relevant tax period.
Penalties for Late Filing: Failure to file VAT returns or late submissions can result in penalties imposed by the FTA.

Additional Points:

Exempt Supplies: Certain goods and services are exempt from VAT in the UAE. It's crucial to understand which supplies are exempt to avoid charging VAT incorrectly.
Reverse Charge Mechanism: In some cases, the reverse charge mechanism applies, where the recipient of the supply, rather than the supplier, is responsible for accounting for VAT.
Free Zones: VAT regulations may differ for businesses operating within specific UAE free zones. It's advisable to consult with the relevant free zone authority for details.

Important Resources:

Federal Tax Authority (UAE): https://tax.gov.ae/en/ offers a wealth of information on VAT registration, filing procedures, and other VAT-related matters.
Ministry of Finance - UAE: https://mof.gov.ae/ provides official information on VAT in the UAE.