A value added tax i.e VAT is a consumption tax put on a product whenever value is added at each stage of the supply chain, from production to the point of sale. The amount of VAT the user pays is on the cost of the product, less any of the costs of materials used in the product that have already been taxed
- Documents identifying the authorized signatory (Passport And/Or Emirates ID)
- Trade license copy of the company
- Other official documents authorizing the entity/individual to conduct activities within the UAE.
- Description of business activities
- Turnover for the last 12 months in AED
- Supporting document for 12-month sales
- Expected turnover in next 30 days
- Estimated value of imports for one year from each GCC countries
- Estimated value of exports for one year to each GCC countries
- Whether you expect to deal with GCC suppliers or customers
- Supporting documents for customs registration in each emirate if applicable.
- Bank account details
A business must register for VAT (Value Added Tax) if its taxable supplies and imports exceed AED 375,000 annually.
VAT registration is optional for businesses whose supplies and imports exceed AED 187,500 annually.
A business house pays the government, the tax that it collects from its customers. At the same time, it receives a refund from the government on tax that it has paid to its suppliers.
Foreign businesses may also recover the VAT they incur when visiting the UAE.
Supposing 5% is the output tax, the output tax you pay is 10,000 AED. So, final (net) VAT payable by you will be 10,000 AED – 5,000 AED = 5,000 AED. In the VAT settlement, you deduct input VAT from output VAT. The resulting amount must be reported to your regional tax office.
Where a VAT registered person incurs input tax on its business expenses, this input tax can be recovered in full if it relates to a taxable supply made, or intended to be made, by the registered person. In contrast, where the expense relates to a non-taxable supply (e.g. exempt supplies), the registered person may not recover the input tax paid.
In certain situations, an expense may relate to both taxable and non-taxable supplies made by the registered person (such as activities of the banking sector). In these circumstances, the registered person would need to apportion input tax between the taxable and non-taxable (exempt) supplies.
Businesses will be expected to use input tax (ratio of recoverable to total) as a basis for apportionment in the first instance although there will be the facility to use other methods where they are fair and agreed with the Federal Tax Authority.