VAT is a value-added tax that is levied on certain goods and services in Dubai. The rate of VAT in Dubai is 5%. There are a few exceptions to this rule, however, such as essential food items and medicines, which are exempt from VAT.
VAT was introduced in the UAE on 1 January 2018 to boost government revenue and diversify the economy away from reliance on oil. The implementation of VAT has been generally well-received, although there have been some complaints about the cost of living increasing as a result.
VAT is not a new concept in the UAE, as it was already being levied on businesses in the free zones before its introduction to the mainland.
However, the implementation of VAT on the mainland is a significant change and has had a major impact on businesses and consumers alike.
What is the Process of VAT Registration in Dubai?
VAT registration in Dubai is a simple process. The first step is to submit an application form to the Department of Economic Development (DED).
The DED will then issue a confirmation letter, which must be presented to the Federal Tax Authority (FTA). The FTA will then issue a VAT registration number, which must be displayed on all invoices and other tax documents.
Businesses must register for VAT if their annual taxable turnover exceeds AED 375,000. Voluntary registration is also possible for businesses with a taxable turnover of less than AED 375,000.
The process of VAT registration in Dubai requires the following documents:
- Application form
- Passport copies of the owners/managers
- Trade license copy
- Memorandum and articles of association (if applicable)
- Audited financial statements for the last two years (if applicable)
- No-objection certificate from the sponsor (if applicable)
- Certificate of good standing from the chamber of commerce (if applicable)
- Certificate of registration from the municipality (if applicable)
- Trade name certificate (if applicable)
- Power of attorney (if applicable)
The documents listed above are required for the initial application. Additional documents may be required during the registration process.
The VAT registration process in Dubai can be completed online or offline. Online registration is preferred as it is faster and more efficient. Businesses can also choose to register through a registered agent.
Once the registration is complete, businesses will be issued a VAT registration certificate. This certificate must be displayed prominently on the business premises.
Businesses must keep accurate records of all transactions and maintain invoices issued and received. These records must be kept for a period of five years.
If you are doing business in Dubai, it is important to be aware of the implications of VAT and to ensure that you are compliant with the new rules.
Failure to comply with the VAT requirements can result in severe penalties, including fines and imprisonment.
If you have any questions about VAT in Dubai, or if you need assistance with compliance, please contact our team of experts at Xcel accounting or call us at - +971 55 101 0691
