Understanding UAE VAT Registration Fee and Requirements

If you’re starting a business, the UAE VAT Registration Fee is one of the key requirements you’ll need to consider when starting a business. You can probably tell you’ll have to present a lot of paperwork. Some of that has to do with establishing a legal and valid presence, and some has to do with building a tax-friendly establishment.

In this post, we cover everything you need to know about VAT registration fee and why Alsun Bookkeeping and Taxation is the perfect fit for you.

What Is UAE VAT Registration Fee?

When you think of a registration fee, you probably think of an annual fee that businesses have to pay at the end of the year. That’s actually not the case here.

You see, VAT registration is actually free. Yes, you don’t have to pay for this registration. Of course, if that was the end of it, we wouldn’t be writing this article.

While the registration itself is free, a physical, attested registration certificate costs AED 250. Do you need a physical copy of the registration certificate? No!

Is it safer to have? Yes! You see, in some scenarios, government entities might ask you to present a physical copy. So, yes, there are several situations where it’ll come in handy.

Who Is Required to Pay VAT Registration Fee in the UAE?

Yes, there’s technically no UAE VAT registration fee. Regardless, the UAE is strict in encouraging businesses that meet specific criteria to register. Here are the entities that are required for VAT.

Businesses Exceeding AED 375,000

Yes, that’s the most straightforward and crucial threshold in this entire process. Any UAE-based business where the taxable supplies and imports exceed AED 375,000 must register for VAT.

That goes for both large and medium-sized companies. As long as you crossed the AED 375,000 threshold in one year, you must register.

Businesses Exceeding AED187,500

So, your business’s taxable supplies and imports don’t exceed AED 375,000. Does that mean you don’t have to register? Not necessarily. You see, there’s such a thing as voluntary registration.

That means you don’t have to register for VAT, but if you do, you’ll enjoy the various financial benefits it offers. Yes, there are various benefits to registering for VAT as a small business. For example, you can reclaim VAT on your expenses, which would improve your cash flow.

Documents Required for VAT Registration in the UAE

So, you’ve determined where your business stands regarding VAT registration and decided it was best to go through the process. The question is: What are the VAT registration requirements? Even when you’re doing VAT registration UAE online, you need to upload the necessary files. These include:

• Certificate of Incorporation, Memorandum of Association, or Partnership Agreement.
• Commercial registration certificate, or any official document issued by the licensing authority.
• A valid trade license, along with branch licenses (if there are any).
• Emirates ID and passport of owners and authorized signatories.
• Power of attorney document for the authorized signatory. That’s usually required if the manager’s name is not mentioned in the Memorandum of Association.
• Official declaration letter stating the total taxable supplies and monthly sales from the starting date to the date of the application. It needs to be stamped and authorized by the authorized signatory.
• Invoices, local purchasing orders, contracts, and completion certificates, as applicable to the type of application.
• For expenses, you need to present at least five VAT invoices with amounts that exceed the registration threshold.
• Expected revenues supported by valid documents stamped and signed by both parties.
• If available, you need to provide customs information.
• Registration documents and supporting evidence for clubs, charities, or associations.
• Copy of the decree (Applicable when selecting “Legal Person – Federal Government Entity in the UAE” or “Legal Person – Emirate-level Government Entity in the UAE”).

VAT Penalties in the UAE

As crucial as it is, something might come up that prevents you from registering for VAT. What happens then? Here are the potential VAT penalties in the UAE you might be looking to face.

Failure to register for VAT: If you don’t register for VAT at all, you’re looking at an AED 10,000 fine.

Late VAT return filing: You’ll be fined AED 1000 for the first missed return filing and AED 2000 for any late return filings in the future that occur within 24 months.

Late VAT payment: You pay 2% of the unpaid tax right after the deadline, an extra 4% if you don’t pay within 7 days, and an extra 1% daily afterwards up to 300% of the unpaid tax.

Incorrect VAT returns: You pay AED 1000 the first time and AED 2000 if you do it again.

Failing to keep accurate records: You pay AED 10,000 the first time and AED 50,000 if you do it again within the following 24 months.

You must keep accurate records of at least the five years prior to registration. If you don’t, you’ll be facing the fine mentioned above.

Failing to issue proper VAT invoices: If you don’t issue VAT-compliant invoices, you’ll be fined AED 5000 per invoice.
Failing to display VAT-inclusive prices: You get fined AED 500.

Benefits of Timely VAT Registration

So, what makes registering for VAT on time that crucial? What will you gain if you do it?

Avoiding Hefty Fines

This one shouldn’t come as a surprise. Obviously, since VAT registrations are mandatory, failing to register on time will result in a fine. As of writing this post, that’s AED 10,000 and an extra AED 1000 for every tax period you didn’t file a VAT return in.

We imagine you don’t want to pay these hefty fines. Well, the only way to do that is to register for VAT on time.

Reclaiming VAT on Business Costs

Business owners know that when they buy new supplies for their business, whether it’s materials, equipment, or services, they don’t just pay for those supplies. They also pay 5% VAT.

Well, if you’ve registered for VAT, you can reclaim those 5% from the VAT you collect from your customers.

Our certified tax agents at Alsun will you with all details and procedures related to vat registration fees.

Making VAT Registration Easy and Transparent for Your Business with Alsun

At Alsun Bookkeeping and Taxation, our ultimate goal is to make the registration process as seamless as possible. How? Simply by taking care of the entire process from start to finish.

Here are all the aspects we’re involved in:

• VAT compliance support
• Documentation preparation
• VAT certificate issuance
• Application submission

Conclusion

Now you know all there is to know about the UAE VAT registration fee. While there isn’t a fee per se, there’s one if you want a physical copy. What’s crucial in this process is to make sure you register on time.

That includes having all the right documents and understanding to take every step properly. Unfortunately, not everyone can do that. That’s where Alsun Bookkeeping and Taxation comes in. We take care of the entire process without you having to lift a finger. Contact our consultants.

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