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VAT Registration, Deregistration & Amendments in UAE

Value Added Tax (VAT) is a transactional tax imposed on most goods and services. However, only those who are registered for VAT or are obligated to register are required to charge VAT. These entities are termed as “taxable persons.” When registered for VAT, these persons receive a tax registration number (TRN) and are called “registrants.”

VAT registration can either be mandatory or voluntary. Additionally, businesses may choose to form a VAT group where two or more legal entities are registered under a single VAT registration.

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Who Needs to Apply for VAT Registration in the UAE?

Mandatory VAT Registration in UAE

VAT registration is mandatory for individuals or entities that meet one of the following criteria:

  • Annual Turnover: The total value of taxable supplies and imports in the UAE exceeds AED 375,000 in the past 12 months.
  • Expected Turnover: The entity anticipates that its taxable supplies or imports will exceed AED 375,000 within the next 30 days

Penalty for VAT Late Registration

Failure to complete VAT registration on time, as per mandatory requirements, will incur a penalty of AED 10,000 once the registration is approved.

Voluntary VAT Registration in UAE

A business may opt for VAT registration voluntarily if they meet either of the following conditions:

  • At the end of any month, the total value of taxable supplies, imports, or VAT-applicable expenses exceeds AED 187,500 in the last 12 months.
  • The business expects that its taxable supplies, imports, or VAT-relevant expenses will exceed AED 187,500 within the next 30 days.

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VAT Group Registration in UAE

VAT group registration allows multiple entities to be treated as a single taxable person. To qualify for VAT grouping, the following conditions must be met:

  • Each member must be a legal person (not an individual).
  • Each member must have a fixed or primary place of business in the UAE.
  • The members must be related entities.
  • One or more entities must control the others in the group.

Benefits of VAT Grouping in UAE

VAT group registration allows businesses to be treated as a single taxable entity, simplifying VAT compliance. Transactions between members of the VAT group are not subject to VAT and are considered out of scope, leading to potential tax savings.

VAT Deregistration in UAE

If a taxable person no longer meets the criteria for VAT registration, they must notify the Federal Tax Authority (FTA) within 20 business days. This is required if:

  • The entity stops making taxable supplies.
  • The value of taxable supplies in the previous two months falls below the voluntary registration threshold.

Failure to deregister within the given timeframe may result in a penalty of up to AED 10,000.

VAT Amendments in UAE

VAT registrants must inform the FTA of any changes that affect their registration details, such as:

  • Changes to name, address, or email.
  • Alterations to trade license activities.
  • Modifications to legal entity type or partnership agreements.
  • Changes in the business operations or primary address.

Failure to notify the FTA of these changes within 20 business days may lead to administrative penalties for non-compliance.

HLB HAMT Management Consultancy (HHMC) to Assist!

Ensure your business remains compliant with UAE VAT laws by handling all registration, deregistration, and amendment requirements promptly and accurately. At HLB HAMT Management Consultancy (HHMC), we guide you through every step, helping you navigate the complexities of VAT with ease. Contact us today!

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