VAT is levied on the supply of goods and services for the purchased and sold items. The VAT is incurred by the end-user. This indirect commercial tax is also known as General Consumption Tax.

Value Added Tax is already active as a Major commercial tax in more than 150 countries. VAT is implemented in the United Arabic Emirates on 1st January 2018. VAT registration is essential for the companies and individuals who are doing business in the UAE with an annual turnover of over AED 3,75,000/-. All the companies and individuals who come under above threshold limit should register VAT.

VAT registration in the UAE is an online process. It is accessible in the online portal of the Federal Tax Authority. Before initiating VAT registration, the applicant should be clear with various traits such as whether to register as a mandatory or voluntary option, whether to register or a standalone or Tax group.

Essential Documents for VAT registration in UAE:

Though the VAT application is applied online, the person who is registering VAT should keep the following documents soft copy to upload along with the application.

  • Trade license copy
  • Memorandum of Association of the Company
  • Documents identifying the authorized signatories
  • Company’s contact details
  • Mail id of the concerned person
  • Power of attorney, Certification of Incorporation, Articles of Association (any one)
  • Financial Statement/Audit Report/Sales Calculation Sheet
  • Business activity description
  • Last one year turn over in AED
  • One year sales supporting documents
  • Turnover expected in the next one month
  • Expected import & export values
  • Whether expected to deal with GCC suppliers
  • Whether expected to deal with GCC customers
  • Bank details including IBAN

The points to be considered before submitting bank details

If a company is registered as a standalone, then the party has to provide any one of his UAE bank accounts. The bank name, branch name, account name and IBAN code shall be produced. The concerned has to provide bank account of the company for which it is being registered and not any other bank account.

If the person registers VAT under TAX group option, then he can give only one bank account number and not all companies of the group.

The advantages of VAT

  • VAT is easy to manage when compared to other indirect taxes
  • Using VAT a huge amount of revenue is generated on a low tax rate
  • Since the VAT is collected in small installments, the consumers feel minimum burden
  • As VAT is being a neutral tax, it can be imposed on any type of business
  • The revenue generation will be constant as VAT is being a consumption tax