A business shall register for VAT Tax if its taxable imports and purchases exceed the AED 375,000 level for necessary registration. Moreover, a business has the option to register for VAT voluntarily if the total value of its taxable imports and services (or taxable expenses) exceeds the voluntary registration threshold of AED 187,500.
Types of Registration
According to federal tax 2022, any company that surpasses the requirements for mandatory or optional registration may be obliged to register for VAT or may be given the option to do so.
1. Mandatory Registration
A BUSINESS MUST REGISTER IF:
the sum of its taxable supply and imports over the previous 12 months exceeds the threshold for compulsory VAT registration for tax business, or
The company expects that within the next 30 days, the combined value of its taxable imports and supplies will be greater than the level that necessitates registration.
The threshold for required VAT registration is AED 375,000. Inapplicable to international firms is this threshold.
2. Voluntary Registration
If a company does not meet the requirements for mandatory registration and:
the value of its taxable imports, supplies, and expenses in the previous 12 months was greater than the threshold for voluntary registration or;
The company expects that within the next 30 days, the combined value of its taxable imports, taxable expenses, and taxable supplies will exceed the voluntary registration threshold.
The required amount for voluntary registration is AED 187,500.
3. Tax Registration of Governmental Bodies
Government Entities, as defined by a Cabinet Decision issued under Clause (2) of Article (10) of this Decree-Law, must apply for tax registration and may not be deregistered absent a Cabinet Decision made at the Minister’s recommendation.
4. Tax Registration for a Non-Resident A Non-resident
If the calculation of Tax for such Goods or Services is the duty of the Importer under Clause (1) of Article (48) of the Decree-Law, a person may not utilize the value of Goods and Services imported into the State to decide whether he is eligible to apply for Tax Registration.
5. Calculating the Tax Registration Threshold
The following calculations must be made to determine if a person has exceeded both the Mandatory Registration Threshold and the Voluntary Registration Threshold:
1. The first is the cost of taxable goods and services.
2. If not covered by Clause (1) of this Article, the value of the Concerned Goods and Concerned Services received by the Person.
3. The value of all or a specific portion of the Taxable Supplies that belong to the said Person, if he has wholly or partially acquired a Business from the Person who made the Supplies.
4. The value of Taxable Supplies made by Related Parties by the circumstances listed in this Decree-Executive Law’s Regulation.
6. Tax De-Registration Cases
In any of the following situations, a Registrant must apply to the Authority for Tax Deregistration:
1. If he ceases to produce Taxable Supplies.
2. If the Registrant does not meet the requirements outlined in Clause (2) of Article 17 of this Decree-Law and the value of the Taxable Supplies made over twelve consecutive months is less than the Voluntary Vat Registration Threshold.
7. For Tax De-Registration
If the value of the Registrant’s Taxable Supplies for the previous (12) months was less than the Mandatory Registration Threshold, the Registrant may apply to the Authority for Tax Deregistration.
8. Registration Exceptions
1. If a Taxable Person only has supplies that are subject to zero rates, the Authority may agree to his request to exempt him from the requirement to register for taxes.
2. Anyone exempt from tax registration under this Article’s Clause (1) must notify the Authority of any changes to his business that would subject him to taxation under this Decree-Law of the federal tax within the time frames and according to the procedures specified in the Decree-Executive Law’s Regulation.
3. Where the Taxable Person was not entitled to the exception, the Authority shall have the right to collect any Unpaid Tax and Administrative Penalties for the period of the exception.
What is a Taxable Supply?
A taxable supply is a provision of goods or services made by an entity in the UAE that may be subject to tax at a rate of either 5% or 0% to determine if a registration obligation is present. For this reason, imports are also taken into account if a supply of hose products or services would be taxable if it were made domestically in the UAE.
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