VAT Registration Guide in UAE: Process, Documents & Timelines 

Compliance with VAT rules and regulations is very important for businesses operating in the UAE, both to escape legal penalties and to run their operations smoothly while gaining market credibility. 

In fact, there are many queries from businessmen, startups, and finance managers on whether VAT registration is necessary, documentation requirements, etc. VAT registration in the UAE might be very complicated, and sometimes a minor mistake in filling out forms or delays can cost you thousands of fines and other problems. 

Also, VAT registration will help your business gain more popularity and trust, leading to larger deals, including government work. 

In this VAT registration guide, we have discussed everything about VAT registration for UAE, from requirements to the process and other common issues. 

What is Value Added Tax (VAT)? 

Value Added Tax (VAT) refers to an indirect consumption tax levied on value added to the product during production and distribution processes. VAT came into effect at a rate of 5%, regulated by the Federal Tax Authority (FTA) via their website EmaraTax. 

This tax is collected from customers (output tax) and paid to the government. However, businesses also get a refund of the VAT paid on purchases for business use (input tax). 

It must be noted that, if an individual is unregistered and has paid input VAT on purchases, it can be claimed after registering. VAT on purchases of services can be claimed after 5 years from the date of purchase.

What are the types of VAT registration in the UAE? 

There are two types of VAT registration in the UAE, mandatory and voluntary.  

Mandatory registration applies to resident businesses in the UAE. It’s required for businesses if their annual turnover exceeds AED 375,000, or it is expected to exceed this level within the next 30 days. 

Note: Non-resident businesses that supply taxable goods or services in the UAE are required to register for VAT, regardless of any threshold, unless a UAE-based entity handles the VAT responsibilities. 

If the turnover does not meet the mandatory threshold, businesses can opt for Voluntary registration, but only if their annual turnover exceeds AED 187,500 in the past 12 months or is expected to do so in 30 days. 

Voluntary registration lets you claim input VAT early. It also lets you use the reverse charge mechanism (RCM) for imports. 

No registration needed/ allowed: If the annual turnover of the company is below AED 187,500, there is no need to register for VAT.  

Which sectors are exempt from paying VAT in the UAE? 

In the UAE, VAT exemptions (0%) targets sectors like financial services, property, bare land and passenger transport. While the educational and healthcare services are mostly exempt or zero-rated, reducing costs. 

The sectors and goods and services exempt from VAT are listed below: 

• Transportation: Domestic passenger transport, intra-city flights, metro services, buses and local public transport. However, international transportation, like air and sea travel falls under zero-rated supplies in UAE. 

• Healthcare and Education: Services like preventive care, treatments and essential medical services. 

• Residential properties: Sales and leases of residential buildings are VAT exempt. After the first supply, they are subject to the standard VAT rate. The first supply of residential properties is zero-rated, allowing developers to recover input VAT. 

• Financial services: Services like interest on loans and certain insurance policies that do not involve an explicit fee or return. But financial services that charge a clear fee, like banking and investment advisory services, may be subject to VAT. 

• Bare land: Transactions including an undeveloped land. 

What are the necessary documents for VAT registration in the UAE? 

The required documents of VAT filing in the UAE includes: 

• A valid trade license, along with a branch license (if applicable). 

• Certificate of incorporation, Memorandum of Association, or Partnership Agreement (if applicable). 

• Commercial or industrial registration certificate, or another official document issued by the licensing authority. 

• Emirates ID and passport copies for the owners and authorised signatories. 

• Power of Attorney for the authorised signatory (required if the manager’s name is not mentioned in the Memorandum of Association, or when adding other individuals as authorised signatories) 

• Official declaration letter stating the total taxable supplies and monthly sales from the date of establishment until the date of application, stamped and signed by the authorised signatory 

• For proof of turnover, at least five VAT invoices with amounts exceeding the registration threshold. 

• Bank letter with details on the bank account information (optional) 

What is the process for registering for VAT in the UAE? 

To register for VAT via the online portal of Federal Tax Authority (FTA), follow these steps: 

Step 1: Create or log in to an EmaraTax account 

You can visit the FTA website at tax.gov.ae or access EmaraTax directly at eservice.tax.gov.ae. You can register for FTA services using your mobile number. Additionally, you can use the UAE Pass to expedite the registration process. 

Step 2: Create a taxable person profile 

To create a taxable person profile first log in to the dashboard. After the login add your business details including business’s trade name, legal name, address, business nature of activities and contact details. 

Step 3: Complete the VAT registration application 

After creating the taxable person profile go to the VAT registration section in the dashboard. Fill the online form for VAT registration with required details which includes the business details, taxable activities, expected turnover, and other required information. Then upload your supporting documents. 

Step 4: Submit the application 

Review and submit the application form. The FTA will review it. 

Step 5: Receive approval and TRN 

After getting approval from the FTA, you will receive a Tax Registration Number (TRN) and VAT certificate which includes the company name, address and TRN. Use the TRN on your invoices, returns, and other communications. 

How long does it take to get approval from the FTA? 

The online application process for VAT registration in the UAE takes around 45-50 minutes while the review process will take around 2 to 4 weeks. 

After the completion of registration process, the approximate timeline for obtaining the approval from the Federal Tax Authority is 20 business days from the date of application submission. 

Note: The review may take longer than 20 days if FTA requires additional information or clarification. 

Conclusion  

Value Added Tax is an indirect tax levied on the sale of goods and services at the rate of 5% in the UAE. While most supplies are subject to this rate, some are exempted (as outlined above) and, in other cases, zero-rated. 

VAT registration for UAE can be done through the online portal of the Federal Tax Authority, EmaraTax by creating an account on it.  

Staying compliant with the tax structure of the country helps a company to grow and expand. It is important to register on time to avoid any penalties and stay compliant. Managing and registering for VAT can be stressful, but at Stratrich Consulting we makes this process hassle-free with our VAT registration and filing services, so you can focus on growing your business.