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VAT Registration for Business Entities / Individuals – Single registration
The UAE implemented Value Added Tax (VAT) on January 1, 2018. This transaction-based indirect tax is applied at every stage of the supply chain and is eventually borne by the end consumer. In other words, VAT is a consumption tax imposed on the value added at every step of the supply chain.
Rates of VAT in UAE: The standard VAT rate in the UAE is 5%. Some goods and services are exempt or zero-rated.
Zero-rated tax under UAE VAT law refers to a special tax treatment where a VAT rate of 0% is applied to certain goods and services. This means that although VAT is applicable the tax rate charged is zero, resulting in no additional cost to the consumer.
This provision is designed to support specific sectors such as exports, international transportation, Education Services, and certain essential commodities like medical & healthcare goods, making them more competitive in global markets and easing the financial burden on consumers for vital goods and services.
Exempted goods under the UAE VAT law refer to specific categories of products that are not subject to the standard Value Added Tax (VAT) rate of 5%. These goods are exempted from VAT, meaning that no VAT is applied to their supply. Exempted goods are often essential items or services that are intended to remain more affordable for consumers.
The key difference between zero rate supplies and exempt supplies is that the suppliers of zero rated goods and / or services can still reclaim/refund all their input VAT. But the suppliers of exempt goods are either not registered for VAT or if they are, they cannot reclaim their input VAT.
VALUE ADDED TAX (VAT) REGISTRATION
TAXATION & COMPLIANCES
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Who is Obliged to register for VAT in UAE?
Registration requirements apply to any natural or legal person conducting business in the UAE, even if the person has no trade license.
UAE-based businesses that conduct taxable transactions in the UAE are obligated to register for VAT if the total value of their taxable supplies and imports in the preceding 12 months has surpassed or is anticipated to exceed within the next 30 days, the obligatory registration threshold of AED 375,000.
Foreign businesses operating in the UAE and carrying out taxable transactions must also undergo mandatory VAT registration, regardless of the value of their taxable supplies and imports. This requirement is applicable when there is no other entity responsible for settling the corresponding tax on these transactions within the UAE.
Who can choose Voluntary registration for VAT in the UAE?
UAE-based businesses that provide taxable supplies in the UAE may voluntarily register for VAT if the cumulative value of their taxable supplies and imports or taxable expenses, incurred in the last 12 months exceeded or is expected to exceed in the next 30 days, the voluntary registration threshold of AED 187,500
No Requirement for VAT Registration – Who all?
Business Entities or individuals are ineligible to undergo VAT registration if the total value of their taxable supplies and imports has remained below the threshold of AED 187,500 in the preceding 12 months or if there is no anticipation of exceeding this threshold within the forthcoming 30 days.
