VAT registration

Every company conducting its business on U.A.E mainland as well as in free zones needs to register for VAT depending on the turnover achieved by the company. The turnover of the company is then used to assess the type of VAT registration that the company needs to do, they are as follows:

Mandatory registration – If the company’s turnover exceeds AED 375,000 annually then the company is mandatorily required to register for VAT.

Voluntary registration – If the company’s annual turnover is between AED 187,500 – 375,000 then the company has its discretion to register for VAT. However voluntarily registering for VAT has its own benefits for the company which are further discussed in the section below.

Benefits of voluntary registration
Reclamation of Input VAT:

Being registered for Value-Added Tax (VAT) allows the companies to claim input tax deductions. The value-added tax that the companies pay on their purchases can be claimed as input tax & can be used to reduce the value-added tax liabilities. For example – If a company purchases goods worth AED 10,000 & pays 5% VAT on the purchase i.e. AED 500 then if the company is registered for VAT in UAE it will be able to reclaim this amount from FTA as a refund.

VAT on inception of new businesses

When a company is newly established, it can still register for VAT if its expenses are over and above the voluntary registration threshold of AED 187,500 even if its turnover does not exceed the voluntary threshold. This is another advantage for a business that registers for Value-Added Tax (VAT).

Tax Registration Number

A company is given a Tax registration number or TRN which it can use on its relevant documents (Invoices) to generate trust of its customers & suppliers.


How can we help with VAT registration?

Oxford Auditing Chartered Accountants has a team of experts in taxation that can facilitate the process of registration for businesses & hence help them in simplifying the tax regime as initiated by the government.