VAT Compliance for Your Business in the UAE

Compliance requirements under the VAT

  • If the company’s annual turnover is higher than AED 375,000 during the last 12 months, the company must register for value added tax in the United Arab Emirates.
  • If the annual turnover is between AED 187,500 and AED 375,000, it is optional that the company is registered under the UAE VAT law. If it is less than AED 187 500 /, the company does not have to register under this law.

Therefore if the turnover is higher than AED 375,000 (US $ 100,000), these companies must be registered under the UAE VAT law.

  • Under the VAT agreement, the person who is considered to be a taxpayer or taxpayer is the person who carries on an economic activity for the purpose of generating income. This person is registered or must register for VAT in accordance with the registration threshold in a Member State. A taxpayer may also include companies located outside the territory of the GCC that are performing economic activities in UAE.
  • A taxpayer under the UAE VAT law must register as soon as the turnover of the company exceeds the prescribed threshold in the VAT Law.
  • It is obligatory for all taxpayers to keep accounting books in accordance with UAE VAT Law. In addition, the authority may request additional documentation, such as Financial statements, general ledger, sales ledger, invoices issued, invoices received, credits, direct debits, sales tax registers, etc. Under the United Arab Emirates VAT Law, books and records must be kept for five years.
  • The Federal Tax Authority (FTA) may allow two or more person resident in the United Arab Emirates to register as VAT tax group. This group will be treated as a single taxpayer to comply with United Arab Emirates’ VAT legislation. Entities can register as VAT group if;
  • Each person has a registered office or permanent establishment in the UAE.
  • People are “connected parties”
  • Or are controlled by another party, or two or more people jointly control others
  • Entities belonging to a VAT group are treated as one entity for VAT purposes of the UAE. Deliveries made between members of a VAT group are not considered VAT transactions of the UAE. In addition, a company cannot be part of more than one VAT group.

Note: The above threshold for registration as Tax Group is calculated as follows:

  • The total value of deliveries made by a taxpayer during the month in which he applies for VAT registration and the last 11 months.
  • The total value of deliveries for the next 30 days in which you apply for VAT registration.

If turnover is greater than AED 375 000 in one of the two previous options, the company must register for VAT. In order to calculate the threshold for VAT Registration, the value of the tax-exempt offer is not taken into account.

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