Compliance requirements under VAT

VAT Registration Threshold.

If the Annual Turnover of the company is more than AED 375,000/, it is mandatory for the company to register under UAE VAT before the end of the year 2017. If the Annual Turnover is between AED 187,500 & AED 375,000/, it is optional for the company to be registered under UAE VAT law. Further, if it is less than AED 187,500/, the company need not register under this law.

For the startups, if the VAT attracted expenses are more than AED 187,500/, (USD 50K) such companies have to be registered under the UAE VAT law.

The threshold mentioned above will be calculated as follows:

• The total value of supplies made by a taxable person for the month in which he is applying for VAT registration and the previous eleven months.
• The total value of supplies of the subsequent 30 days on which he is applying for VAT registration.

If in any of the above two options, the turnover is more than AED 375,000/- the company has to register for VAT.

For arriving the turnover for VAT registration purpose, value of exempted supply will not be considered.

Who is a Taxable person under GCC VAT Agreement?

Taxable Person means any person who is conducting an economic activity for the purpose of generating Income.

• Such person is registered or obliged to register for VAT as per the registration threshold in a member state.
• Taxable person can include businesses located outside the GCC territory.
• Taxable person can be any individual person conducting an economic activity.

Registration for VAT

A taxable person as per the UAE VAT law can register in the third quarter of the year 2017. It is mandatory to get registered by every taxable person under the VAT registration platform before the end of the year 2017.

What is Tax Group / VAT Group?

Member State may allow 2 or more persons that are residents of the same member state to register for VAT as a Tax Group. Such group will be treated as a single taxable person for compliance of UAE VAT law. Entities can register as VAT Group if:

• Each person has a place of establishment or a fixed establishment in the UAE.
• The persons are “related parties” and
• Either one person controls others, or two or more persons from the partnership control the others

Entities within one VAT Group are treated as one entity for the UAE VAT purpose. Supplies made between members of a VAT Group will not be considered as a transaction under UAE VAT. Further, one entity cannot be part of more than one VAT group.

Record Keeping

It is mandatory for every taxable person to maintain books of accounts under UAE VAT law. In addition to that the authority can ask for additional documents such as, annual accounts, general ledger, purchase day book, invoices issued, invoices received, credit notes, debit notes, VAT Ledger etc. Under the UAE VAT law the books of accounts and records are to be maintained for five years.