The Value Added Tax (VAT) was introduced in the United Arab Emirates (UAE) on January 1, 2018, as part of the government’s efforts to diversify the economy and reduce reliance on oil revenue. VAT is a tax on the value added to goods and services at each stage of production and distribution. Businesses that provide taxable goods and services are required to register for VAT in the UAE if their annual turnover exceeds the mandatory threshold of AED 375,000. In this article, we will discuss the process of VAT registration in the UAE and why businesses may need to hire a service provider for this process.
Process of VAT Registration in the UAE
To obtain a VAT registration number in the UAE, businesses must follow a series of steps that include:
Step 1: Check Eligibility
The first step for businesses that are considering VAT registration in the UAE is to check if they are eligible for registration. As mentioned earlier, businesses that provide taxable goods and services are required to register for VAT if their annual turnover exceeds the mandatory threshold of AED 375,000. However, businesses that provide zero-rated or exempt supplies may also choose to voluntarily register for VAT.
Step 2: Gather Required Documents
Once a business has determined that they are eligible, the next step is to gather the required documents. The documents required for VAT registration in the UAE include:
- Trade license
- Memorandum of Association (MOA) and Articles of Association (AOA)
- Passport copies of the shareholders and managers
- Emirates ID copies of the shareholders and managers
- Contact details of the business
- Bank account details
- Financial statements for the last 12 months (if available)
Step 3: Submit Online Application
The next step is to submit an online application for VAT registration through the Federal Tax Authority’s (FTA) e-Services portal. The application must include all the required documents and information, including the business’s name, trade license number, Emirates ID number, contact details, and bank account details.
Step 4: Receive VAT Registration Number
Once the FTA has reviewed the application and all the required documents, they will issue a VAT registration number to the business. It is a unique identifier that businesses use to identify themselves as registered for VAT in the UAE.
Step 5: Start Collecting and Paying VAT
Once a business has obtained a VAT registration number, they must start collecting VAT from its customers and paying to the government. VAT is calculated as a percentage of the value of the taxable goods or services and is charged to the end consumer.
Why Hire a Service Provider for VAT Registration?
While it is possible for businesses to register for VAT in the UAE on their own, there are several reasons why they may want to hire a service provider for this process.
- Expertise and Experience
VAT registration and compliance can be a complex and time-consuming process, especially for businesses that are new to the UAE or have limited experience with VAT. Hiring a service provider that specializes in VAT registration and compliance can provide businesses with the expertise and experience they need to navigate the process efficiently and effectively.
- Save Time and Resources
VAT registration and compliance can be a time-consuming and resource-intensive process, especially for businesses that have limited staff or resources. By hiring a service provider, businesses can save time and resources that can be better used to focus on their core operations and business goals.
- Avoid Mistakes and Penalties
Failure to comply with VAT regulations in the UAE can result in penalties, fines, or suspension of VAT registration. Hiring a service provider that is experienced and knowledgeable in VAT regulations can help businesses avoid mistakes and penalties that can result from non-compliance.
- Additional Services
Many service providers that specialize in VAT registration and compliance also offer additional services such as bookkeeping, accounting, and tax advisory services. These additional services can help businesses stay on top of their financial and tax obligations and ensure that they are in compliance with all relevant regulations and laws.
Contrary to popular belief, hiring a service provider for VAT registration and compliance can be a cost-effective option for businesses, especially for those that have limited staff or resources. Service providers typically offer flexible pricing options that can be customized to meet the specific needs and budget of the business.
Finding a Service Provider for VAT Registration
Businesses that are interested in hiring a service provider can search for providers using keywords such as “VAT registration near me” on search engines or business directories. However, it is important to note that the cost of VAT registration should not be the only factor considered when choosing a service provider. Other factors to consider include:
- Expertise and experience
- Reputation and reviews
- Additional services offered
- Flexibility and customization
- Customer support and communication
Cheap VAT registration:
It refers to the cost-effective options available for businesses to register for VAT in the UAE. While it may be tempting for businesses to opt for the cheapest service provider, it is important to consider the quality of the services provided. Cheap VAT registration does not always mean the best value, and businesses should also consider the expertise and experience of the service provider. However, cost is an important factor for businesses, especially those that have limited resources. Service providers that offer flexible pricing options that can be customized to meet the specific needs and budget of the business can provide a cost-effective option for.
In conclusion, It is a mandatory requirement for businesses that provide taxable goods and services in the UAE. While it is possible for businesses to register for VAT on their own, hiring a service provider can provide several benefits, including expertise and experience, saving time and resources, avoiding mistakes and penalties, additional services, and cost-effectiveness. When choosing a service provider, businesses should consider factors such as expertise and experience, reputation and reviews, additional services offered, flexibility and customization, and customer support and communication.