Ensure your business complies with UAE tax regulations
Our team can help you register your business for VAT and obtain an individual or corporate tax residency certificate from the Federal Tax Authority (FTA).
VAT Compliance and Threshold Assessment in UAE
Our team comprises highly experienced and qualified accountants who specialize in helping businesses understand and comply with the UAE’s Value Added Tax (VAT) policy. We can assess your invoices, quotations, contracts, and purchase orders to determine whether your business falls under any of the two categories: mandatory or voluntary registration.
Mandatory registration applies when your business’s value of taxable goods and services has exceeded the mandatory registration threshold (AED 375,000.00) in the previous 12-month period or if your company anticipates that the total value of all taxable goods and services will exceed the mandatory registration threshold (AED 375,000.00) in the next 30 days.
Voluntary registration applies when your business’s value of taxable goods and services has exceeded the voluntary registration threshold (AED 187,500.00) in the previous 12-month period or if your company anticipates that the total value of all taxable goods and services will exceed the voluntary registration threshold (AED 187,500.00) in the next 30 days.
Must Know
If your business revenue is below AED 187,500.00, you are not yet eligible for VAT registration. However, if your business exceeds the threshold, you have 20 working days to apply.
You need to have a corporate bank account to facilitate the registration process.
Our VAT & Tax Consultancy
Welcome to our VAT & Tax Consultancy, where expert guidance meets tailored solutions. From securing tax residency certificates to navigating FTA portals and optimizing VAT returns, our team is dedicated to ensuring your tax compliance and efficiency.
Tax Residency
Our tax advisors can assist you in securing an individual or corporate tax residency certificate from the Federal Tax Authority.
VAT Returns
Our team prepares quarterly VAT reports to help you determine if you have VAT payable/refund.
FTA Portal and Documentation
Our experienced accountants will guide you through each step, from creating an online account through the FTA portal to assisting with and submitting any required documents in the formats mandated by the FTA.
Tax Consultations
Speak one-on-one with our qualified tax experts for customised planning so your business can achieve efficient tax outcomes whilst ensuring compliance with all your tax obligations.
VAT Registration (TRN)
Benefit from our comprehensive assistance and registration facilitation, as we leverage the expertise of our in-house accountants to ensure a smooth VAT registration process with the FTA. Our team not only offers invaluable advice on eligibility for potential VAT exceptions but also guarantees peace of mind by ensuring compliance.
Upon completion of the process, you’ll receive your Tax Registration Number (TRN) certificate, solidifying your adherence to UAE VAT regulations and allowing you to focus on your business endeavors with confidence and assurance.
But it doesn’t have to be this way.
Before you do anything, talk to one of our experts in Dubai. We’ll show you how easy the process is and why we’re the partner of choice for entrepreneurs who want to establish a business in Dubai.
Our Rates
Registering for VAT does not have to be complicated with our VAT advisors by your side. Get expert advice from our team and ensure your business is VAT-compliant.
- VAT registration
Annual rates
AED 1,249.00
- Individual tax residency
AED 1,500.00
- Corporate tax residency
AED 2,500.00
The above individual and corporate tax residency rates do not include government fees.
*All rates are inclusive of 5% VAT.
A Guide to VAT Compliance in Dubai and the UAE
Did you know that individuals are not taxed in the Middle East? Only oil companies and foreign banks are taxed.
This is great news for anyone who wants to start a business in Dubai. However, since January 1, 2018, Dubai has started charging value-added tax (VAT) on most goods and services.
As a business owner, you will have to charge VAT on almost all goods and services, from food at restaurants to hardware tools. If you are surprised about VAT and want to learn more, you have come to the right place. Keep reading for a complete guide to VAT in Dubai.
Why Should You Consider Starting a Business in Dubai?
Starting a business in Dubai has several advantages, including the government’s funding initiatives to boost business growth and the thriving economy. However, most people consider tax benefits to be the most significant advantage of starting a business in Dubai.
Dubai is a part of the Middle East, which has zero tax on both personal and corporate income. Additionally, the only tax you need to pay is the value-added tax, which is relatively low at 5%.
If you set up your business in a free zone, you can enjoy a 0% corporate and income tax rate, zero customs duties, and the option to repatriate 100% of your business profits.
What Does Value-Added Tax Mean?
Value-added tax, commonly referred to as VAT, is a type of tax that is based on consumption. Unlike taxes that are imposed on income, VAT is levied on purchases of goods and services. It is added to every stage in the manufacturing and distribution process where a business has added value to the product.
The customer usually pays VAT on any purchases made. The business is responsible for collecting the VAT and then remitting it to the government. Failure to do so can result in penalties or even criminal charges.
VAT is the most common type of consumption tax. Over 150 countries, including European Union members, Canada and New Zealand, have implemented VAT.
History of VAT
Starting from January 1, 2018, businesses in the UAE were required to register for VAT and collect and remit the amounts to the government. This was the first time the Middle East had implemented VAT, and the Federal Tax Authority (FTA) was established to manage and collect federal taxes.
The implementation of VAT aimed to reduce the government’s dependence on income derived from oil by providing a new source of income to fund various services such as hospitals, parks, and waste control. It applies to all online and traditional store purchases received in Dubai since its implementation in 2018.
7 Things to Know About VAT in Dubai
The reality is that there are several steps you need to take before starting a business in Dubai. You want to make sure you get your business formation Right From The Start. This can help you avoid any potential problems in the future.
1. VAT in Dubai Is Levied at a Rate of 5%
The first thing you need to know is that the VAT in Dubai applies at a flat rate of 5%. This rate applies to all taxable supplies of goods and services, including imports. However, some services are exempt from VAT, so it’s crucial to determine if your supply is taxable or not.
A taxable supply refers to any collection of goods or services that are offered for consideration by a person who is engaged in business activities in Dubai. This would include all retail businesses, food served at restaurants and hotels, and other forms of entertainment. So, if you’re planning to start a business in Dubai, it’s likely that it would be classified as a taxable supply.
2. Certain Services Have 0% VAT
To determine if the 5% VAT applies to you, it is important first to assess if any of your supplies are classified as 0% VAT or exempt. It is worth noting that some services come with a 0% VAT rate, meaning businesses offering such services must include zero value in their invoices.
Goods and services exported outside the Gulf Cooperation Council (GCC) member states, which include Bahrain, Kuwait, Oman, Qatar, Saudi, and the UAE, are subject to the 0% VAT rate. Additionally, the 0% VAT rate applies to international transportation, supply of crude oil or natural gas, investment-grade precious metals like silver and gold with 99% purity, healthcare, education, and newly constructed residential properties that are supplied for the first time within three years of their construction.
In addition, if you are considered “outside of the state,” you may also be subject to a 0% VAT. A person is considered “outside of the state” if they have been in the state for less than a month or if the reason they are in the state is not connected with the supply.
It’s important to note that zero-rated VAT is different from exempt VAT. If you provide a zero-rated taxable supply, you still have to register for VAT with the government and issue an invoice, but you will be charged 0% VAT.
3. Certain Services Are Exempt From VAT
Unlike zero-rated services, exempt services are not charged VAT. In other words, if a business provides exempt services, they do not have to pay VAT. Only four items are exempt from VAT: financial services, the supply of residential property, vacant land, and local public transportation.
Financial services are generally those that deal with money. This includes exchanging currency, providing loans or credit, deposit-taking or savings accounts. Providing insurance contracts also falls under exempt financial services. However, to qualify for VAT exemption, you must charge a fee, discount, or commission for these services.
The supply of residential buildings is also exempt from VAT. This applies whether you are selling or leasing the property. However, it’s important to note that places that are not fixed to the ground and can be moved, such as RVs and motor homes, are not considered residential buildings. Hotels and motels are also not exempt from VAT.
Finally, exempt services include any local transport by land, water, or air from one state to another state. If you run a business that provides local transport services, you should check whether these services are exempt from VAT. Even local transport by helicopter or aeroplane is exempt from VAT.
4. Businesses earning AED 375,000 annually are subject to VAT
If you do not have any zero-rated or exempt taxable supplies, you must apply a 5% VAT. However, it’s essential to note that not all businesses are obligated to register for VAT. You need to meet a minimum threshold before it becomes mandatory.
If your business makes taxable supplies or imports worth AED 375,000 or more annually, you must register for VAT. On the other hand, if you have taxable supplies or import goods worth more than AED187,500, you can choose to register for VAT.
5. You Can Get Some of Your VAT Paid Back
As a business, you have the responsibility to charge VAT to your customers. However, you purchase some goods and services on which you also have to pay VAT. But, you have the opportunity to receive back some of the VAT you paid, which is known as Input Tax.
Your entire VAT liability is the total amount of VAT you collected from your customers minus the Input Tax. Input tax is the amount of money paid by the business when purchasing certain goods. You can claim back any tax paid on inputs.
To explain further, let’s say a business bought 10 computer tablets from a supplier in a month and sold 20 tablets to a customer. They paid 5% VAT on the purchase, and the customer also paid 5% VAT. This can lead to double taxation on the same product. That’s why the business can claim back the VAT they paid on the first purchase. Ultimately, the VAT is only charged once to the end user.
But remember, you cannot claim back VAT if you offer exempt services.
6. You Need to Register for VAT
This should not come as a surprise to you, but you need to register for the VAT. You have to register with FTA, which regulates VAT in Dubai.
First, you need to create an e-service account. You need to do this before you can register for VAT. To sign up, you’ll need a valid email address.
Once you create an account, you can start the registration process from the FTA’s portal. Enter all the information and attach the documents. You’ll need to provide contact and banking details.
Once the FTA approves your application, they will give you a unique Tax Registration Number. You can use that to sign in to your VAT portal.
You’re obligated to keep track of your taxable supplies. Make sure all your information is up to date. You’ll be obligated to register once you’re over the minimum threshold. You don’t want to be over the limit and not realize that you have VAT obligations.
You must file your VAT return with the FTA online within 28 days from the end of the “tax period”. A tax period depends on your annual turnover. If you have an annual turnover below AED 150 million, you need to file your VAT returns monthly.
Larger businesses with an annual turnover of over AED 150 million must file monthly returns. This threshold ensures that the business makes its VAT payment monthly without creating delays or confusion. These larger amounts of VAT payments are better dealt with monthly.
7. You Can Pay Online
At the end of every tax period, it’s mandatory to submit a VAT return to the FTA through their online portal. This summarises the total taxable supplies you made during that period. It also shows how much VAT you should have collected and now need to pay to the government.
You’re required to file VAT returns and pay any VAT owed every quarter by the 28th of the following month. Late filing of returns can result in penalties. Missing the deadline will lead to a penalty of AED 1,000 for the first time and AED 2,000 for every other instance of late filing.
The penalty for late payment can be significant. It’s 2% of the unpaid VAT amount for the first 7 days and 4% after the first 7 days. If you don’t pay the VAT amount within a month, you will have to pay a penalty of 1% per day until it reaches 300% of the unpaid VAT amount.
Even if you have a zero-rated supply, you’re still required to file your VAT returns. Failure to do so will result in the same late-filing penalties.
You may have VAT payable or VAT owing. If you have VAT owing, you can easily pay it online through the official FTA website. You can pay via credit card, eDebit or bank transfer. The bank transfer can be either local or international.
Paying your VAT should be easy. You must ensure that you pay the amounts on time. The flexibility of the payments makes it easy and convenient for you to pay your VAT.
Ready to Start Your Business in Dubai?
You know all about the VAT in Dubai, a requirement that started in 2018. There is no personal or corporate income tax in Dubai. Remember you want to ensure you get all your reporting, collecting and remitting obligations under VAT when starting your new business.
Now that you know everything there is to know about VAT in Dubai, you need to consider all the costs of starting a business. Let us help you calculate the cost of starting a business so you can be prepared for anything. Use our business cost calculator today.
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United Arab Emirates
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