Value Added Tax or VAT is an Indirect Tax. Occasionally, you might also see it referred to as a type of general consumption tax. In a country which has a VAT, it is imposed on most supplies of goods and services that are bought and sold.
VAT will be another source of raising revenues for governments in the Gulf Cooperation Council (GCC). It is estimated that UAE will generate more than Dh 12 billion additional revenue in the first year of implementation of this new tax.
GCC countries have decided to implement taxation as part of governments’ efforts to diversify revenues in the context of sharp decline in oil prices. The International Monetary Fund has been recommending fiscal consolidation in GCC through diversification of government revenues and reduction of subsidies.
VAT will be introduced in the UAE, along with other GULF countries, from January 1st 2018.
By virtue of this Federal Law by Decree, a public federal authority shall be established under the name of the Federal Tax Authority (FTA) under the Ministry of Finance. The headquarters of the authority shall be located in the city of Abu Dhabi. The authority shall be in charge of managing and collecting federal taxes and related fines, distributing tax-generated revenues and applying the tax-related procedures in force in the UAE.
Companies in the UAE that report annual revenues (Sales Turn over) of over AED375, 000/- will be obliged to be registered under the GCC VAT system. Companies whose revenues fall between AED187, 500/- and AED375, 000/- will have the option to register for VAT during the first phase of VAT implementation.
Companies fall under the above categories are subject to registration with VAT authorities and to complete the registration form.
VAT registration form will be available via the FTA’s online portal.
The deadline of the Registration for VAT has been given by FTA as follows:
During the registration process various documents are requested to validate the information provided.
Supporting documents will include such items as:
Following approval of the application a Tax Registration Number will be issued.
Each member state may treat the Tax Group as a Single Taxable Person
Two or more persons carrying on a business are able to apply for a single “group” VAT registration where:
In effect, entities within the VAT group are treated as one entity for VAT purposes.
Our VAT services team shall assist you in: