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VAT Registration

VAT Registration

Read here to know about the VAT registration applicability on your business and the process thereof.

Every person who has business in GCC countries & provides taxable supplies or imports needs to obtain registration on mandatory basis if the total value of supplies exceeds AER 375, 000.

What is VAT Registration & why is it necessary ?

Every person who has business in GCC countries & provides taxable supplies or imports needs to obtain registration on mandatory basis if the total value of supplies exceeds AER 375, 000(or the local equivalent) and may choose to obtain voluntary registration if the total value of supplies is less than AER 375,000(or the local equivalent) but exceeds the threshold of AER 187,500. Similarly, a business may register voluntarily if their expenses exceed the voluntary registration threshold. This latter opportunity to register voluntarily is designed to enable start-up businesses with no turnover to register for VAT.

How to calculate threshold limit?

To calculate the threshold limit the taxable person needs to consider the:

  • Total value of supplies made by a taxable person for the previous 12 months; or
  • Total value of supplies of the subsequent 30 days
  • Value of exempted supplies will not be considered for computing the taxable supplies.

Taxable supplies include: Standard rated supplies+ Zero-rated supplies+ Reverse charged services received+ imported goods

Will zero-rated supplies count for the registration threshold?

Yes, the taxable supplies including zero-rated supplies count for the registration threshold. However, note that it might be possible that some GCC member states will allow, under certain conditions, a company which only makes zero-rated supplies to be excluded from the mandatory registration on request. The UAE and KSA have indicated that they may allow such exclusions in certain cases.

Does a nonresident need to register under VAT?

There is a requirement for non-residents to register for VAT in the GCC, in the event that they need to pay VAT on supplies made by them in a GCC member state (e.g. the place of supply is in the GCC and the customer is not able to self-account for the VAT due under the reverse charge Mechanism).

If a person is engaged only in supplying Zero-rated supplies; does he need to register under VAT?

If a person is making only zero-rated supplies he is not required to obtain registration & in case he wants to claim a refund of recoverable input tax, in such situation he needs to obtain registration.

What is the language that will be used for registration?

The expectation is that the registration platform will be available in English. This is confirmed to be the case for KSA and the UAE.

Will a business selling across the GCC be liable to register in each member state if only established in one?

A business selling across the GCC will only be required/entitled to register for VAT in another member state if the nature of its supplies of goods and services require it to be (e.g. the place of supply is in another GCC member state and the reverse charge mechanism cannot be used).

When to use your VAT number?

A customer VAT number will be needed to enable a supplier of goods and services to a recipient in another GCC country to invoice without VAT. In the long run, a portal to enable the checking of VAT numbers is expected to be made available.

What is the method for registering under VAT?

Registration for VAT is expected to be carried out online mostly. In some cases, if there is need for further documentation then any additional documentation may be requested offline (likely to vary for each GCC member state)

Will there be VAT grouping?

Businesses that satisfy certain requirements covered under the Legislation (such as being resident in the UAE and being related/associated parties) will be able to register as a VAT group. For some businesses, VAT grouping will be a useful tool that would simplify accounting for VAT.

Can we ‘VAT group’ establishments in different GCC states?

Entities conducting trade across the GCC member states might not be able to ‘VAT group’ under the new VAT law, however, member states can adopt local VAT grouping as a provision.

Will businesses established in one GCC member state and providing services to individuals in another member state be required to register for VAT in that second member state?

It is unlikely that a business established in one GCC member state is required register again for providing services to individuals in another member state.

Will there be a common system of VAT registration so you can check whether you are dealing with a taxable person?

The GCC Agreement envisions an electronic matching system for intra-GCC systems. However, this system might not be available for a while and it is also likely that a VAT number checking system will be released country by country.

When are businesses supposed to start registering for VAT?

VAT will be implemented on 1 January 2018. Any business that is required to be registered for VAT and charge VAT from 1 January 2018 must be registered prior to that date. To enable businesses to prepare for the introduction of VAT and comply with this registration obligation in time, the electronic registrations will be open for VAT from the third quarter of 2017 on a voluntary basis and a compulsory basis from the final quarter of 2017 for those that choose not to register earlier. This will ensure that there is no last minute rush from businesses to register for VAT before the deadline.

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