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How to Register VAT for a Freelancer in UAE

It is the era of creators, and the UAE government has taken several steps in the past few years to ease and enhance the work platform for freelancers in the UAE. The Abu Dhabi Department of Economic Development announced the freelancer visa in November 2020. The benefit of this visa is any professional can work in the UAE as a freelancer and does not require office space. They can register themselves and their families for UAE residency visas. An audit of financials is mandatory if the freelancer's revenues fall under the scope of UAE VAT.

VAT for Freelancers in UAE

A freelancer gets their trade license, if the revenues generated from the freelancing business are AED 375,000 or more, they are eligible for VAT filing. Freelancers such as influencers, coders, artists, photographers, etc., quickly accumulate revenues of more than AED 375,000 in the UAE. Hence they are not exempt from taxes. Also, if the revenues fall between AED 187,000 to AED 375,000, then it gets optional for a freelancer to register for VAT. Revenues below AED 187,000 are not eligible for VAT reporting.

How to Register for VAT in the UAE as a Freelancer?

Since the freelancer visa can be availed by both UAE residents and non-residents, it becomes a much simpler process to register for VAT. A full-time working employee can apply for a UAE freelancer visa. A non-resident, on the other hand, gets a residency permit once their freelancer visa is approved.

VAT registration for freelancers is a must if revenue falls under the VAT threshold.

Step 1- Get the License

A freelancer can register for a Tax Registration Number (TRN) once they secure their trade license and show revenue of AED 375,000 within a given financial period. A working employee, or must acquire the permission of the employer to apply for a freelancer trade license. It is to ensure that the person's freelancing activities do not clash with the company's policies.

Step 2- Registration online

Online VAT registration is possible on the FTA (Federal Tax Authority) portal.

  • A login credential must be created on the FTA website, also known as the e-service account. One can start by clicking on signup and following the details such as email id, passwords, codes, and email verification for secure login.
  • Login to the FTA portal of the E-Service account. The unique TRN number is visible on the portal.

For registration, below are some of the essential documents.

  • Memorandum of association
  • Sponsorship agreement
  • Copies of passport and Emirates ID
  • Bank account details
  • Trade License
  • Financial reports of revenue projection and past audited financials.

FTA Approved Steps for VAT Compliance by a Freelancer

VAT treatment for a freelancer is similar to that of a standard business in the UAE. However, it is more flexible. VAT is based on the invoice number and the invoice amount. Each line item must be taxable if the relevant VAT applies to it. Any line item in the invoice that is exempt from tax should be separately mentioned under the same invoice. Each invoice must show the total Invoice VAT and the total VAT value clearly. The Invoice sequencing must also be unique and strict compliance must be followed to avoid any duplication.

Some software caters to freelance businesses and is easy to use.

Three Reasons Why Must a Freelancer Seek Professional Accounting Services in the UAE

  1. To Avoid Disruption in Business

Many times freelancing is a one-person show. A person may have a small team of people for assistance but keeping a full-time accountant, or chartered accountant is a considerable cost. Several audit firms in Dubai and the UAE offer VAT services. They can conduct a financial audit and help file VAT reports. It is much wiser to hire a consultancy for accounting and financial services than to have a full-time finance department.

  1. Avoiding Penalties

A freelancer is a business person who is 100% involved in almost all business activities. One of the main criteria for VAT is to file the VAT at the given appropriate time. A strict penalty is in place for non-compliance with VAT filing. To avoid unnecessary expenses or liabilities, audit firm services prove to be beneficial.

  1. Save on software investments

The accounting software claims to provide 100% solution, but only a competent accountant can pick the crop from the weeds. Instead of investing money, time, and effort in software that one cannot understand, it is best to seek professional help from audit firms in the UAE, providing software solutions and accurate reporting for VAT filing.

Farahat & Co is a VAT consultancy that caters to VAT services. They have an entire group of registered VAT Consultants that leave no stone unturned and help freelancers such as you to have a smooth process for VAT reporting as per your company's schedule.

Ervee is a CPA with international experience in Tax and Accounting. He has over 12 years of experience in accounting and bookkeeping and over a year in VAT implementation, registration, and accounting in UAE. He regularly drives out inefficiencies in company operations and loves the challenge of helping clients find additional ways for an easier and improved compliance and verification of transactions.