VAT Registration Threshold
- When the Annual Turnover of the company exceeds AED 375,000/, it is mandatory for the company to register under UAE VAT before the end of the year 2017.
- When the Annual Turnover is between AED 187,500 & AED 375,000/, it is optional for the company to be registered under UAE VAT law. And, if it is less than AED 187,500/, the company need not register under this law. In the case of startup companies, if the VAT attracted expenses exceed AED 187,500/, (USD 50K) such companies have to be registered under the UAE VAT law.The thresholds described above will be calculated as under:
- The total value of supplies made by aØ taxable person for the month in which he is applying for VAT registration and the previous eleven months.
- The total value of supplies of the subsequent 30 days on which he is applying for VAT registration.Ø
- If in any of the above two options, the turnover exceeds AED 375,000/- the company has to register for VAT. For arriving at the turnover for VAT registration purpose, value of exempted supply will not be considered.
Who is a Taxable person under GCC VAT Agreement?
A Taxable Person means any person who is conducting an economic activity for the purpose of generating Income.
- Such a person is registered or obliged to register for VAT as per the registration threshold in a member state.
- A Taxable person can include businesses located outside the GCC territory.
- A Taxable person can be any individual person conducting an economic activity.
Registration for VAT
A taxable person as per the UAE VAT law can register in the third quarter of the year 2017. It is compulsory to get registered by every taxable person under the VAT registration platform before the end of the year 2017.
What is Tax Group / VAT Group?
A Member State may allow two or more persons that are residents of the same member state to register for VAT as a Tax Group. Such a group will be treated as a single taxable person for compliance of UAE VAT law. Entities can register as a VAT Group if:
- When Each person has a place of establishment/a fixed establishment in the UAE.
- When the persons are “related parties” Amd
- Either one person controls others, or two or more persons from the partnership control the others
All the Entities within one VAT Group are treated as one entity for the UAE VAT purpose. Supplies made between the members of a VAT Group will not be considered as a transaction under UAE VAT. Moreover, one entity cannot be part of more than one VAT group.
It is compulsory for every taxable person to maintain books of accounts under UAE VAT law. In addition to that, the authorities can ask for additional documents such as, annual accounts, general ledger, purchase day book, invoices issued, invoices received, credit notes, debit notes, VAT Ledger etc.Under the UAE VAT law the books of accounts and records are to be maintained for a period of five years.
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