Value Added Tax (VAT) registration offers entrepreneurs, SMEs, and corporations several benefits, including eligibility to reclaim tax paid on goods and/or services acquired. As a business grows, it can easily reach the turnover threshold of Dhs375,000. Preemptively registering for VAT before the threshold is reached could save the business the hassle of adjusting product/service pricing to accommodate the prevailing VAT rate.
A VAT registered business, a legal entity acknowledged by the Federal Tax Authority, is authorized in collecting VAT from its clients or customers and remitting the collected amount to the government. It’s the only entity that can charge VAT on supplies of goods/services, pay VAT to the Federal Tax Authority, and file a VAT return periodically.
UAE businesses can or should apply for registration of VAT as per the nation’s tax authority:
- Voluntary registration – Business with a turnover between Dhs187,500-375,000 per annum;
- Mandatory registration – Business with a turnover of more than Dhs375,000 per annum
VAT Registration Charges in UAE
The applicant has to pay Dhs500 to request an attested registration certificate, VAT registration is free as it has been done in the e-Services portal of the Federal Tax Authority.
VAT Registration Penalties
- Non-registration – Dhs20,000;
- Late filing of tax return – Dhs1,000 (first offense) and Dhs2,000 (second offense within a period of 24 months);
- Non-disclosure of tax on imports – 50% of the total unpaid tax;
- Submission of incorrect return – Dhs3,000 (first offense) and Dhs5,000 (repeated offense);
- Non-disclosure of errors on tax record/s – Dhs5,000 (first offense) and Dhs15,000 (repeated offense);
- Non-maintenance of proper tax records – Dhs10,000 (first offense) and Dhs50,000 (repeated offense)
Regardless of the size of the business operations, registered businesses are required to maintain accurate records of their income, assets, expenses, liabilities, and VAT charged on the provision of goods/services.
Read More: VAT Refund Claims
At Farahat & Co., we will help you understand the country’s tax legislation and ensure full compliance for your business. Our tax experts can help ensure proper documentation is submitted to the Federal Tax Authority. Our tax experts have followed the proper procedures in completing the VAT registration process.
The firm has an advisory team that can prevent your business from incurring penalties for improper compliance. Our experts will provide you with support and guidance regardless of the challenges you face with VAT registration and implementation.
Call us today to consult with our tax specialists!