With the announcement of the introduction of VAT in UAE from 1st January 2018, it is mandatory for the businesses to register themselves as per the criteria specified in the new tax regime. All the individuals or the firms engaged in businesses activity have to comply with the rule laid down by the Federal Tax Authority. Registration will be necessary for all the firms that fall under the threshold annual turnover of AED 375,000 and more than 3.5 lakh of businesses are expected to register under this new regime. The businesses that have not registered for VAT will neither be able to charge VAT on their sale nor will be able to claim Input VAT paid on their purchases. A business can get itself registered, regardless of the fact that they meet the threshold annual turnover criteria or not, i.e. there is an option of voluntary registration too, for the businesses that don’t fulfill the minimum annual income criteria but are above the base of AED 187,500. The registration criteria have been described below in more explanatory form.
Mandatory Registration: It is mandatory for the businesses to register themselves if
- The annual turnover exceeds AED 375,000 and this threshold must have been exceeded in the last 12 months
- Taxable supplies can be made by the business in next 30 days that will have a value more than the threshold of mandatory registration.
Voluntary Registration: The businesses that don’t meet the mandatory threshold criteria can opt for voluntary registration if
- The annual turnover exceeds AED 187,500 but is below AED 375,000 and this threshold is expected to be exceeded in next 30 days.
- In last 12 month duration, the taxable expenditure exceeds the worth of voluntary registration threshold.