VAT Registration can be complex and getting it wrong could mean that your application is ‘denied’. We decided to write this article in order help applicants avoid the common errors that we have had to deal with on behalf of our clients.
Profits Tax Consultants is a tax consultancy and accounting firm based in Dubai and licensed by the DED. We provide fixed fee accounting services to businesses all over Dubai and Sharjah. We provide free Vat Registration compliant software and we are the only firm in the UAE to provide real-time accounting services through our unique cloud accounting business model. Visit us on www.dubaitaxexperts.com
VAT Registration – Mandatory
Ultimately if you are an existing business and in the last 12 months (no longer 2017 but till date)your sales exceeded AED 375,000 then you must register for VAT. This is considered Mandatory registration. If however your sales in the last 12 months were below AED 375,000 but above AED 187,500 then you can still register for VAT on a Voluntary basis.
Vat Registration for Businesses not registering could face a penalty of AED 20,000 as per the FTA and this deadline has now been extended to the end of April 2018. You must apply to register before this date.
Firstly, you need to create a user name and ID which is a very simple process and takes only 5mins. You can do that by visiting this link: https://eservices.tax.gov.ae/en-us/signup
Once registered you have to wait for the confirmation email to be sent to your email address used in the registration. Note: please do not forget your email ID and PW or security questions (and yes many people go forget).
Section 1 – About the applicant
Key mistakes made in this section are what to select when the trade license is a professional license? From our experience we have had no problems with selecting Legal person – Other and then entering Sole Establishment in the ‘If other, please specify’ section.
Also it is very important to select Mandatorily v’s Voluntarily. Only select Mandatorily if your past sales are over AED 375,000 otherwise always select Voluntarily.
Always select no to Tax Group unless you are registering for a Tax Group and this subject area will be covered in another article.
Section 2 – Details of the applicant
Legal entity name needs to be exact and do not worry about the Arabic as you can go to the DED website here: http://www.dubaided.ae/English/Pages/default.aspx and actually search your trade name and copy and paste the Arabic wording.
Trade License information should be exact and the rest of this section is pretty straightforward.
Section 3 – Contact details
A simple point to note here is that whatever contact number is entered here will receive SMS updates from the FTA in regards to the Vat Registration matters of the company.
Section 4 – Bank Details
Bank details have not always been a mandatory requirement and in our opinion where it is voluntary I would just leave it blank. If mandatory then complete with the main bank account details used by the business.
Section 5 – Business Relationships (optional)
This section has always been optional and therefore we always choose not to complete this section.
Section 6 – About the VAT Registration
Very important section and a ‘must get right’ section. Select the closest activity as you will not always find the right activity.
Turnover is your gross sales for the last 12 months – NOT 12 months of 2017 – but the 12 months till the date of application. Upload of proof is nearly always optional and I would only use this section if you are a commercial landlord whereby you will need to upload the title deed of the commercial property.
Expect turnover in the next 30 days is provisional but try to keep it as realistic as possible and in any case is should be over AED 15,000 in order to qualify for Voluntary Registration.
Import and Export and the rest of these areas are a very technical point and not possible to discuss in this article. We may soon write an article on Import & Export and in that article we will cover this section in more detail.
For those of you who do not Import or Export then its simple NO, NO, NO, NO.
Section 7 – Declaration
The declaration will require you to enter all your details again and it does always ask for Proof of Authorization and in the past we have always uploaded the Visa Page of the Manager in this section as it effectively confirms that the person has a Manager Visa from the company and typically this seems to work as a POA to manage the affairs of the company.
If you are operating in the name of a local sponsor then you really need to get a Power of Authority letter drafted and signed by the sponsor giving you authority to act on behalf of the company ‘on all matters relating to VAT Accounting and the FTA’.
Section 8 – Review and Submit
I would recommend that you make a printout of the initial submission and review in detail against all IDs and make sure that it is 100% correct. This will save you weeks in time if it is submitted incorrectly.
Once submitted you must make sure that you always have access to the email ID used in the initial registration process as this is where all communication will be sent as well as the mobile number used.
The standard time is takes for the FTA to respond is 20 working days and they normally revert much sooner. Just expect that it can take up to 30 days in total.
If any amendments are required it is ideal to make them sooner than later.
That’s all from us at Profits Tax Consultants and remember we charge AED 500 to apply for your VAT Accounting although you could manage it yourself using this article. Contact us on www.dubaitaxexperts.com
This article was written by Ali Afzal, a tax consultant in Dubai and the Managing Director of Profits Tax Consultants.