Registering Value Added Tax (VAT) in UAE - Marque way
 

Registering Value Added Tax (VAT) in UAE

February 26, 20210

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Top Guidance and Procedures for Registering Value Added Tax (VAT) in the UAE

Paying tax to the government is our contribution to the upliftment of the country that gave us a livelihood. In the UAE, The Federal Tax Authority (FTA) was formed in 2016 to collect taxes from citizens and migrant business holders to bring optimum revenue for boosting the economy.

Value Added Tax (VAT) is one of the common consumption taxes that came into effect in the UAE in 2018 at a standard rate of 5%. VAT is an indirect consumption tax levied on a product in each stage of the supply chain, i.e. from manufacturing to sale.

Over 150 countries have now implemented the VAT considering it as a more transparent form of tax collection. Unlike sales taxes, where you need to pay taxes at the end of the supply chain, VAT disentangles the complexities and reduces the final stage fiscal burden. Let’s see some of the benefits of registering for VAT in the UAE.

Benefits of VAT Registration in the UAE

VAT offers many heightened advantages for business holders in the UAE. Knowing the crucial aspects of VAT is necessary to bring down the complexities and improve profit. A business setup company can help you make effective use of the VAT system. Some of the crucial benefits include:

1. Boost Reputation and Eases Business Dealings

Top companies in the UAE prefer business dealings with a business group that produces a VAT invoice. VAT is an imperative factor that determines the competency and authenticity of your business enterprise.

2. Helps to Save Money and Earn Profit

If you are prompt in paying the VAT, you can reclaim it once your output VAT (VAT included while selling the goods) is lesser than the input VAT (VAT included while purchasing goods). Since you don’t need to pay a large amount of money in the final stage, you have ample time to save money to meet future needs.

3. VAT is Neutral to All Types of Businesses

Diversification of VAT to other business fields helped the UAE government to compensate for the fall in oil prices and other revenue sources. This helped the UAE government to raise its GDP.

4. Reduces scope for Tax Evasion

VAT has necessitated a genuine record of sale and purchase details. Traders and manufacturers need to produce the original bill to prove that they have paid the VAT amount. Keen verification methods based on purchase and sale records instil foolproof security to curb tax evasion.

5. Makes Your Business Accountable and Improves Cash Flow

Accurate track record of business transactions helps to make your business transparent and organic. Moreover, a thorough understanding and management of VAT can help you to increase the cash flow. Grab the guidance of an expert consultant to learn about VAT and its functioning.

Before you register for VAT, you should know about the products and services covered under it and exempted. Also, make sure that you have basic information on the requirements needed to apply for VAT.

  • If the value of your goods and services exceed AED 37,5000, then you must register for VAT
  • If the value exceeds AED 187, 500, then it is your choice to register or not.

Moreover, it is necessary to understand the products list that is excluded from VAT. It is broadly categorized as:

Zero Rate Products

Essential product supplies that are exported outside the Gulf Cooperation Council (GCC) are categorized under zero-rated products. It includes obligatory services like health infrastructure, education, airport services, sea and land-based commercial transportation, crude oil and some realty properties.

Exempt Rate Products

Residential spaces, some financial services, bare land, partially completed projects and the public transport systems are included in the exempt rate product list.

You should cross-check the VAT product list categories before you register to make sure that your business or property comes under the VAT list.
Now let’s see the step by step procedures to Register for VAT

How to Register for VAT

You can easily register for VAT by filling an online form available on the FTA website. Here are the essential steps involved in online registration for VAT

    1. 1. Create an e-service account to access the FTA website
    1. 2. Provide personal details and business information. It includes

      • Name of the applicant
      • Contact Information
      • Business Type
      • Banking Details
      • Trade License Details
      • Details of Manager or other equivalent authority
      • Import and export details
      • Passport details and emirates ID
    1. 3. Upload scanned copies of essential documents like Audit report, financial statement, calculation sheet
    1. 4. Fill the declaration, then review & submit your application

Once you submit the application, the FTA will notify your status within 5 working days. If they need more documents to validate your request, they will send you an email notification requesting for more evidence-based documents for further clarification. Moreover, you can track the progress by logging in to your account.

VAT for Transparent business Dealings in the UAE

To make your VAT registration process simple, advantageous and informatory, you can get hold of the assistance of a business setup company in the UAE.

Marque Way business setup company in the UAE provides guidance to boost your cash flow and profit by reducing the complexities of the VAT registration process. Accelerate your business and boost your reputation by indulging in Taxable business transactions.

 

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Copyright by Marqueway