How to register for VAT tax?
Businesses can register for VAT tax through the e-services section on the FTA website. However, they need to create an account first. For more details about VAT tax registration, please read VAT registration User Guide.
Important: All businesses must submit an application to register for VAT as soon as possible to avoid the risk of missing the deadline that is 1 January 2018. Those who fail to apply for VAT would be liable to fine/s as per the Administrative Penalties stipulated in Cabinet Decision No. 40 of 2017 on Administrative Penalties for Violations of Tax Laws in the UAE. For more information, please check the FTA's official website.
Note: The Executive Regulation of the Federal Decree Law No. 8 of 2017 on Value Added Tax was issued in November 2017. Read the regulation.
About VAT in UAE
The UAE is considering levying Value Added Tax (VAT) from January 2018. The rate of VAT will be 5 per cent.
VAT will provide the UAE with a new source of income which will be continued to be utilised to provide high-quality public services. It will also help government move towards its vision of reducing dependence on oil and other hydrocarbons as a source of revenue.
Implication of VAT on individuals
VAT, as a general consumption tax, will apply to the majority of transactions in goods and services. A limited number of exemptions may be granted.
As a result, the cost of living is likely to increase slightly, but this will vary depending on an individual's lifestyle and spending behaviour. If an individual spends mainly on those things which are relieved from VAT, he is unlikely to see any significant increase.
The government will include rules that require businesses to be clear about how much VAT an individual is required to pay for each transaction. Based on this information, individuals can decide whether to buy something.
Implication of VAT on businesses
Businesses will be responsible for carefully documenting their business income, costs and associated VAT charges. Businesses that meet the minimum annual turnover requirement (as evidenced by their financial records) will be required to register for VAT. Businesses that do not think that they should be VAT registered should maintain their financial records in any event, in case the ministry needs to establish whether they should be registered.
Registered businesses and traders will charge VAT to all of their customers at the prevailing rate and incur VAT on goods/services that they buy from suppliers. The difference between these sums is reclaimed or paid to the government.
VAT-registered businesses generally:
- must charge VAT on taxable goods or services they supply
- may reclaim any VAT they have paid on business-related goods or services
- keep a range of business records which will allow the government to check that they have got things right.
VAT-registered businesses must report the amount of VAT they have charged and the amount of VAT they have paid to the government on a regular basis. It will be a formal submission and it is likely that the reporting will be done online.
If they have charged more VAT than they have paid, they have to pay the difference to the government. If they have paid more VAT than they have charged, they can reclaim the difference.
VAT in GCC
The UAE needs to coordinate VAT implementation with other GCC countries because she is connected with them through 'The Economic Agreement between the GCC States' and 'The GCC Customs Union'. The GCC has always worked together in designing and implementing new public policies as such collaborative approach is best for the collective development of the region.
Read more about VAT on the websites of:
- Registration user guide - warehouse keepers and designated zones
- Registration user guide – VAT
- Registration user guide – tax groups
- Getting started guide - VAT
- Getting started guide - tax groups
- VAT treatment for selected sectors (PDF, 218 KB)
- VAT for businesses (PDF, 2.6 MB)
- VAT for education (PDF, 1.81 MB)
- VAT for retailers (PDF, 6.09 MB)
- Guidance on zero-rated and exempt supplies (PDF, 1.44 MB)
- 10 things you need to know about VAT (PDF, 1.64 MB)
- VAT treatment of properties (PDF, 2.63 MB)
- VAT treatment for imported goods (PDF, 336 KB)
- Know your rights - Tax invoice (PDF, 402 MB)
- Know your rights – Education (PDF, 140 KB)
- Know your rights – Healthcare services (PDF, 139 KB)
Updated on 15 Jan 2018