Are you a new business owner or start-up in Dubai and the UAE? Here’s what you should know about VAT
14 January 2018| Last updated on 13 November 2018
If 2018 is the year you decide to launch your own business in Dubai or elsewhere in the UAE – congrats! There is a lot of paperwork we’re sure you’re already aware of that you’ll need to complete in order to get set-up and running – licensing, rental, banking etc. – but there’s now an additional step you must take… And that’s registering for VAT in the UAE.
From January 1st, 2018, products and services in the UAE have been subject to a VAT standard rate of 5%. While there are some things that are exempt from VAT, if your business falls under any one of the taxable industries, here’s the steps you must follow in order to register your business for VAT in the UAE…
Mandatory registration for VAT in UAE
As per the official Federal Tax Authority (FTA) website, a business must register if:
- The total value of your taxable supplies* made within the UAE exceeds the mandatory threshold over the previous 12 month period, or
- You anticipate making taxable supplies* with a value exceeding the mandatory resignation threshold in the next 30 days.
- The mandatory registration threshold is AED 375,000.
Voluntary registration for VAT in UAE
You may also register your business for VAT if you do not meet the above mandatory registration criteria, and:
- The total value of your taxable supplies* or taxable expenditure in the previous 12 months exceeds the voluntary registration threshold, or
- You anticipate that the total value of your taxable supplies* or taxable expenditure will exceed the voluntary registration threshold in the next 30 days.
- The voluntary registration threshold is AED 187,500.
The purpose of the voluntary registration option for business owners and start-ups ensures that your business is fully prepared for the full VAT application once the minimum amount for the mandatory registration threshold is reached.
VAT applies to the entire ecosystem, and so businesses, whether new or still below the mandatory registration amount, should be prepared and gear up their accounting systems in the right way.
By voluntarily registering for VAT for your business in Dubai and the UAE, you are effectively preparing yourself for the day you cross the threshold limit.
*The definition of ‘taxable supply’
A taxable supply, as per the FTA website, refers to a supply of goods or services made by a business in the UAE that may be taxed at a rate of either 5% or 0%.
Registering your business for VAT online
Business owners and businesses may register for VAT online via the Federal Tax Authority website. You will be required to register account in order to proceed with your registration.