Compliance requirements under VAT
Tax Registration thresholds under VAT
- Annual Turnover
- Registration under VATA
- More than AED 375,000/-
- Mandatory
- Between AED 187,500 & AED 375,000/-
- Optional
- Less than AED 187,500/-
- Not required
Startups are required to register under UAE VAT regulations if their VAT-attracted expenses exceed AED 187,500 (USD $50,000).
The tax slab mentioned above is determined as follows:
- A taxable person’s total supply value for the previous eleven months and the month in which he is seeking for VAT registration.
- The entire amount of goods he plans to purchase over the next 30 days in order to register for VAT.
- The business must register for VAT if the turnover in either of the two aforementioned alternatives exceeds AED 375,000.
- The value of an exempted supply will not be taken into account when calculating turnover for VAT registration.
Taxable person under GCC VAT Agreement
Any individual who engages in economic activity in order to make money is considered a taxable person.
- According to a member state’s registration threshold, such an individual is either registered for VAT or required to do so.
- Businesses based outside of the GCC may be considered taxable persons.
- Any individual engaging in economic activity may be a taxable person.
Registration for VAT
According to UAE VAT law, a taxable person may register during the third quarter of 2017. It is required that all taxable individuals register on the VAT registration platform by the end of 2017.
What is Tax Group / VAT Group?
A Tax Group is made up of two or more inhabitants of the same member state who register for VAT. In order to comply with UAE VAT rules, such a group will be regarded as a single entity. Organizations may sign up as a VAT Group if
- In the United Arab Emirates, every individual has a fixed establishment or place of business.
- They are “related parties,” and either one of them dominates the others, or two or more members of the partnership do.
For VAT purposes in the UAE, entities that are part of the same VAT Group are considered to be one entity. Under UAE VAT, supplies made between members of a VAT Group shall not be regarded as a transaction. Further, one entity cannot be part of more than one VAT group.
Record Keeping
According to UAE VAT law, all taxable persons are required to keep books of accounts. Furthermore, the authority has the right to request other papers, including the VAT Ledger, annual accounts, purchase day book, general ledger, invoices sent and received, and credit and debit notes.
The books of accounts and records must be kept for five years in accordance with UAE VAT regulation.
