VAT seeks to secure more state income, which is estimated to be around Dh12 billion fort the UAE in the first year.
Dubai - Businesses required to visit www.tax.gov.ae, select e-Services portal, sign up and create an account
All businesses in the UAE, whose taxable supplies and imports of goods and services exceed Dh375,000 over the past 12 months, have to expedite the registration process for value added tax (VAT) to meet the January 1, 2018 deadline and avoid the risk of incurring penalties, the Federal Tax Authority (FTA) said on Wednesday.
The FTA's circular, reminding businesses of the administrative penalty of Dh20,000, as well as additional penalties related to late payment of tax, comes in the wake of the issuance of the VAT Executive Regulation on Tuesday. His Highness Sheikh Mohammed bin Rashid Al Maktoum, Vice-President and Prime Minister of the UAE and Ruler of Dubai, signed the eagerly-awaited regulation, marking a new milestone in the application of an efficient taxation system in line with best international standards.
The FTA circular, which clarifies the registration procedure for VAT, also seeks to remove doubts about the on-time implementation of the landmark tax reform, which is expected to propel the UAE into the next trajectory of growth.
The five per cent VAT is a consumer-based tax on the supply of both goods and services, and is designed so that only the ultimate consumer bears the burden. With the exception of exempt and zero-rated supplies of goods and services, VAT will be payable on consumer goods and services by everyone and, as such.
The introduction of VAT in the GCC has been driven by the World Bank and its initiatives to move GCC states' economies away from a reliance on oil and gas. VAT seeks to secure more state income, which is estimated to be around Dh12 billion fort the UAE in the first year.
The UAE has already embarked on a new journey on October 1 when it started implementing excise tax, exactly three months ahead of the launch of VAT, the region-wide tax initiative.
The registration portal is available to all businesses around the clock. The FTA website has been specially designed to provide guidance to registrars on the completion of their applications, said the FTA.
"Businesses are required to visit the website www.tax.gov.ae, select the e-Services portal, sign up and create an account. Once the email has been verified, they can log in and register," said the circular.
The FTA has urged businesses to provide accurate information and make sure they enter it properly into the application form. To complete the registration process, scanned documents must be attached, including the business or trade licence, passport/Emirates ID (for UAE residents) of the manager or owner of the business, and the authorised signatory (if the signatory is not the manager him/herself), as well as proof of authorisation for the manager or signatory (e.g. articles of association, power of attorney attested by notary, etc.).
It said issuing a Tax Registration Number (TRN) may require up to 20 working days or less. "Therefore, and in order to ensure that the application is processed - and the TRN issued before January 1, 2018 - the FTA urges businesses to complete their registration to avoid the penalties as per the Cabinet Decision No. (40) of 2017 on Administrative Penalties for Violations of Tax Laws in the UAE."
"Two or more legal persons conducting business in partnership may apply for Tax Registration as a Tax Group if: each of them has a place of establishment or fixed establishment in the UAE; if the persons are related parties, i.e. they are not separated in economic, financial or regulatory aspects; or if one or more of the Persons in the group control the others," FTA circular said.
It said persons intending to register as a Tax Group should nominate a representative member who shall apply to register them. The representative member applies first by completing a VAT registration application stating that the intention is to be part of a Tax Group, FTA said.
"After the representative member is issued with a Tax Identification Number (TIN), the additional members of the group may be added through Tax Group Registration. Members can be added whether they have registered separately or not. After the process is complete and the application to add members has been submitted, a TRN will be issued for the whole Group. More information can be found in the Legislation and Guides section, on the FTA website," it said.