Condition of the VAT Registration Process

Understanding the Condition of the VAT Registration Process By the VAT law and its corresponding regulations, as well as the GCC VAT agreement, specific criteria must be met to become a registered VAT entity. These criteria are outlined in Articles 7 and 8 of the executive regulations and elaborated further in Articles 50, 51, and 52 of the GCC agreement.

1. As a company, understanding the taxable supplies threshold is crucial for your financial planning and compliance with tax laws. In the United Arab Emirates, their taxable supplies must exceed AED 187,500 or USD 50,000
2. As a crucial requirement, the second condition entails mandatory registration. Once an individual reaches the threshold, they are obligated to submit a registration application with the esteemed Federal Tax Authority (FTA) within a strict 30-day timeframe. This ensures that all necessary documentation is in place and that the individual complies with the FTA’s regulations.
3. As per the regulations set by the Federal Tax Authority (FTA), if a person fails to submit their registration application at the mandatory registration threshold, the FTA reserves the right to activate an automatic registration process for tax purposes. This measure is put in place to ensure that all individuals adhere to their tax obligations and play an active role in contributing to the economic growth and development of the nation.
4. As a prerequisite for VAT registration, businesses are required to undergo both historical and future revenue tests. These tests serve as a crucial step in ensuring that businesses meet the requirements for VAT registration. By assessing past and projected revenue, businesses can gain a comprehensive understanding of their financial standing and take proactive steps to comply with VAT regulations. Let us help you navigate this process with ease and confidence.
5. A non-resident person who is required to register by the provision of the VAT Law, FTA shall register him with the effective registration date on which persons started making taxable supplies in UAE;
6. and in case of late registration for tax, the taxable person will be liable to account for and pay the due tax to FTA on all taxable supplies and imports by him since the time the person reached the mandatory registration threshold.

Understanding the Condition of the VAT Registration Process According to the VAT Law and Executive Regulations, businesses crossing the mandatory registration threshold must inform the Federal Tax Authority (FTA) within 20 business days. If not, the FTA reserves the right to register the business and impose a penalty for non-compliance automatically. On the other hand, voluntary registration is open at any time. There is no penalty for voluntary registration provided the taxable revenue is above 187,500. Don’t let procrastination cost you; act fast to avoid unnecessary penalties and stay on the FTA’s good side.