Value Added Tax is an indirect tax based on the value of goods and services. The government levies it on the sale of products and services. The final burden is on the consumer. On behalf of the government, the businesses collect and account for the tax. VAT becomes another source for the government to earn income which will add to the continued provision of high-quality public services in the future. UAE and other gulf countries introduced it at the commencement of 2018. The percentage of VAT is 5%.
There are several VAT consultants in the UAE that provide professional help to businesses in this matter.
Requirements for VAT Registration:
If your company has a yearly turnover of AED 375,000, you will be obliged to enroll for VAT. The company that has a yearly turnover between AED 187,500 and 375,000 can voluntarily enroll for VAT. There is a list of documents essential for the VAT Registration method, as mentioned below in the procedure.
VAT Enrollment procedure:
The online enrollment will take you about 20 minutes if all your official papers are in place. However, if you do not have documents readily available, you can save the form at any point and continue filling it later. This procedure has two stages. Firstly, you have to create an e-services account and after that finish the registration for VAT. VAT consultants can assist you in the process.
- Make an account through FTA online portal:
The Federal Tax Authority (FTA) has started an online portal to enable enterprises to enroll for VAT. Just like how essential it is for a company registered for VAT to educate itself on the various aspects of how it operates, it is equally necessary for businesses to comprehend how to apply for VAT and its intricate details. This will help the business prepare well in advance as to how they need to progress. The first thing you need to do is to create an e-service account through the FTA online portal. It is quite similar to setting up different social media accounts and very simple.
- Log in to the account you created:
Once your email id is verified, the next stage is to log in to your account with the username and password you created.
- VAT Registration Form:
Filling up the VAT Registration form is the following stage. The form includes numerous divisions, and you must give the details that are required. It contains information on the applicant, your contact and banking details, your business relationships and a declaration. You have to attach scanned copies of specific documents which are as follows:
- Passport/ Emirates ID of manager/owner (If a resident of UAE)
- Passport copy/ Emirates ID of authorized signatory (If a resident of UAE)
- Business or Trade License
- Proof of authorization
If the firm wants to make sure they are complying with the new laws, they have to update their IT systems and train their employees regarding the whole process. Moreover, they require to include VAT into their accounting systems. They may require VAT services in the UAE for the same.