All business concerns in the United Arab Emirates dealing with taxable supplies whose value exceeds AED 375,000 in any of the Emirates in one financial year or will surpass the exempt limit within the next 30 days must register for UAE-VAT.
It is mandatory for Business Establishments without a physical presence in the UAE to register for UAE-VAT as the above VAT regulation does not apply to them. However, a business entity can apply for an exception from UAE-VAT registration, supposing its taxable supply is Zero-rated.
Continue reading to know how businesses or individuals in UAE apply for an exception from VAT registration.
What are Zero-Rated Supplies in the UAE?
The UAE-VAT tax applies to the taxable supplies, but the VAT rate charge levy is at 0%, so such taxable supplies are zero-rated supplies in the UAE. The suppliers of such products must register and file tax reports themselves for UAE-VAT purposes. In compliance with Article 45 of Federal Decree-Law no. (8) of 2017, the following groups are eligible for zero-rated taxation in the UAE:
- Healthcare services, including preventive and essential care and associated goods and services
- Educational services and related goods and services for federal or municipal government-owned or supported nurseries, preschools, schools, and higher education institutions
- Natural gas and crude oil
- Buildings transformed from non-residential to residential units due to a sale or lease.
- Buildings that are expressly constructed tour for charity are available for purchase or leasing.
- Residential structures must be sold or leased in whole or in part within three years of completion.
- Precious metals investments.
- Aircraft or boats intended for air or sea rescue and assistance.
- Exports of products and services beyond the Gulf Cooperation Council (GCC)
When Should a Business seek an Exception from UAE-VAT Registration?
A business in the UAE can apply for an exception from UAE-VAT registration if they expect an unexpected downturn in the industry, resulting in the value of the taxable supplies they deal in falling below the UAE-VAT threshold or if they are zero-rated taxable.
Although businesses have the provision to seek an exception from UAE-VAT, it is up to the Federal Tax Authority (FTA) to approve or disapprove the request.
Suppose the FTA approves the request of the business and it allows the company to apply for an exception from UAE-VAT registration. They must follow the below-mentioned guideline:
Such businesses must apply for UAE-VAT registration. However, when filling out the VAT Application Form, you will see a section asking if you intend to apply for an exception from VAT registration; if so, click "yes" and submit the VAT registration form.
Conclusion
Business is all about earning profits. It is thus advisable to reduce the UAE-VAT tax liability and expenses by applying for the UAE-VAT exception at the right time.
How Can We Help You?
Flyingcolour experts can help you with filling up your UAE-VAT forms well in time to avoid irregularities and unpleasantness in the future,
Book your free consultation with us to know more about the comprehensive services.
To learn more about How to Apply For An Exception From VAT Registration?, book a free consultation with one of the Flyingcolour team advisors.
Disclaimer: The information provided in this blog is based on our understanding of current tax laws and regulations. It is intended for general informational purposes only and does not constitute professional tax advice, consultation, or representation. The author and publisher are not responsible for any errors or omissions, or for any actions taken based on the information contained in this blog.