Value Added Tax (or VAT) is an indirect tax. Value Added Tax or VAT is a tax on the consumption or use of goods and services. A VAT is levied at the point of sale. VAT was introduced across the UAE on 1st January 2018 at a standard rate of 5%.
The Federal Tax Authority (FTA) is the governmental entity responsible for the administration, collection, and enforcement of federal taxes in the United Arab Emirates (UAE).
Criteria for registering for VAT
It is mandatory for businesses to register for VAT in the following two cases:
A business must register for VAT if their taxable supplies and imports exceed the mandatory registration threshold of AED 375,000.
Furthermore, a business may choose to register for VAT voluntarily if their supplies and imports are less than the mandatory registration threshold, but exceed the voluntary registration threshold of AED 187,500.
Similarly, a business may register voluntarily if their expenses exceed the voluntary registration threshold. This latter opportunity to register voluntarily is designed to enable start-up businesses with no turnover to register for VAT.
Ally Accounting & Auditing provides VAT registration services to the FTA, it essentially aids businesses in registering for VAT within the UAE.