Mandatory Registration
Required for all businesses if the total value of taxable supplies and imports in the last 12 months exceeds the minimum registration threshold.
Also mandatory if a company expects the total value of taxable supplies and imports to exceed the registration threshold within the next 30 days.
Voluntary Registration
A business can choose voluntary registration if it meets the mandatory registration criteria.
Voluntary registration is applicable if the total value of taxable supplies, imports, or taxable expenses in the past 12 months exceeds the voluntary registration threshold, which is AED 187,500.
Penalty for Non-registration of VAT
If a company doesn’t complete VAT registration within the specified time or fails to register after exceeding the manual threshold, they face a penalty of AED 20,000.
The Exempted Businesses for VAT Are
- Residential properties.
- Undeveloped land.
- Local passenger transportation.
A Value Added Tax Certificate Consists of Basic Information Such As
- VAT Registration Number
- Date of VAT registration
- Issue Date
- Address of the registered entity
- First VAT return period
- VAT return due date
- Start and end dates of tax periods
Why VAT Registration Is Important
Boosts Business Profile: Registering for VAT enhances a company’s reputation.
Prevents Penalties: Avoids unnecessary fines by complying with registration requirements.
Facilitates VAT Refunds: Allows businesses to claim VAT refunds.
Expands Market Opportunities: Opens up wider possibilities in the market.
VAT Return
For businesses registered under VAT in the UAE, filing VAT returns is a must. They need to provide information about both input VAT (what they pay to suppliers) and output VAT (collected from sales) during a specific period. If the output VAT is more than the input VAT, the business needs to pay the difference to the Federal Tax Authority.