VAT registration is open, are you prepared?
Drive Live’s Tim and Natalie recently had ‘VatMan’ on. Azeem Zafar is the CEO of VatMan Gulf who provide a VAT focused service.
Here he answers some frequently asked questions on VAT registration:
Who needs to register?
The mandatory registration threshold has been set at AED 375,000 of annual taxable sales. All businesses with sales greater than this threshold will be required to register. Businesses with sales greater than AED 187,500 but less than AED 375,000 of annual taxable sales will be allowed voluntary registration.
How do you register?
Registration is done online through the Federal Tax Authority (FTA) portal. A considerable amount of information is required for this process.
Does the FTA charge any registration fees?
The FTA does not charge any registration fees, registration is free. The issuing of an attested tax registration certificate has a fee of AED 500 per certificate.
What is taxable turnover?
Taxable Turnover is value of sales made by a business at the standard rate (5%) or at the zero rate (0%). Sales that are exempt or outside the scope of VAT are not included in this value.
What is the penalty for not registering on time?
The penalty for not registering when required to do so is AED 20,000. The exact wording in the law is “The failure of the taxable person to submit a registration application within the timeframe specified in the Tax Law” will result in penalties being imposed on the taxable person.
What are the registration deadlines?
The FTA, in a press release, has urged all businesses to adhere to the following timeline: (i) All businesses with an annual turnover exceeding AED 150m should register before 31 October 2017. (ii) All businesses with an annual turnover exceeding AED 10m should register before 30 November 2017. (iii) All ‘remaining’ businesses that must be registered by 1 January 2018 should submit their registration applications before 4 December 2017 to minimize the risk of not being registered in time for the beginning of 2018.
What is the biggest challenge when registering?
Understanding what information and documents are required to be uploaded to the website.
How does single or group registration work?
A single registration is for stand-alone businesses, where there are no sister or associated businesses. However, where there are a group of companies they can elect to register as a group. They will have to prove that each member is related to the other (i.e. they share economic, financial and organizational ties).
What is a group and its benefits?
The primary benefit of forming a VAT group is that there is no VAT charged on intra-group transactions, which has cash flow and administrative advantages.