VAT registration is necessary for many businesses in the UAE. All businesses who cross a certain threshold have to get registered for VAT. If they do not do so, they might get penalized.
Value Added Tax (VAT)
Value Added Tax or VAT is the tax issued on goods and services. It was introduced in UAE on 1 January 2018. VAT rate in UAE is 5 per cent and it helps the government in providing welfare to the UAE residents. One of the main purposes behind the implementation of VAT is that it reduces the UAE’s government dependence upon oil and other hydrocarbons. People who know the importance of the well-being of the country would really appreciate the implication of VAT in UAE.
When companies or businesses file for VAT registration in UAE, they do not get registered right away. They have to wait for at least a month before their application gets processed. The application processing takes time. So, before you get registered for VAT, you will be issued a VAT registration number.
What is a VAT registration certificate?
A business can get registered for VAT by filing in an application. The application can be filed either by using online means or by using the paper form. After filing the application, the applicant will receive a VAT registration certificate. The certificate contains the VAT number of the applicant.
Sometimes due to uncertainties, there may be some delay in issuing the certificate, but in most cases, the system runs smoothly and the certificates are able to be issued quickly.
What if your VAT registration number isn’t issued?
If your turnover exceeds AED 375,000 per annum, you will be obliged to register for VAT. VAT accounting must be started right from when the business decides to register voluntarily for VAT.
After getting registered for VAT, the business must keep all the records of invoices. It is important to keep all the details for reclaiming the VAT and making sure that you are paying the VAT to the suppliers.
If you have registered for VAT and you VAT registration certificate hasn’t been issued yet, you should not charge VAT on any of your invoices. You should instead charge VAT to the clients and explain to them about the re-issuance of the invoices with the VATable amount after receiving the VAT number.
If you are not issued with your VAT number, we would recommend that you wait for a while before issuing invoices.
When to get VAT registered?
VAT registration is not just important but also mandatory for businesses who cross the threshold of AED 375000. All businesses who come under this category are obliged for VAT registration in UAE. If any business wants to get registered for vat voluntarily, it can do that also.
VAT Consultancy Services in UAE
Professional VAT consultants in UAE know the true importance of VAT. They know the registration processes thoroughly. Businesses who want to get registered for VAT can seek their advice. This will make things easier for a lot of companies.
You can either contact them by calling them or visiting their website. They will provide guidance about how to file the VAT application and how to implement VAT moving forward.