How to get a VAT Certificate in UAE

                              How to get a VAT Certificate in UAE

What is VAT?

Value added tax (vat) is a consumption tax applied on a good as its value is increased each stage of its production or distribution. It is an indirect tax that is related to a taxpayer’s consumption and not their income. Vat is applicable in more than 160 countries.

What is a VAT Certificate? – How to get a VAT Certificate in UAE

It is a certificate issued for establishments or people to exempt them from VAT introduced in various nations, despite of existence of an agreement.

Ministry of Finance offers two types of Tax Certificates for eligible government entities, private sector firms and individuals living and working in the UAE, namely:

1. Value Added Tax(VAT) Certificate
2. Tax Domicile Certificate, to spare them from Value Added Tax (VAT),

This completely automated online service is applicable to paying fees and submitting the required documents. Certificates will be eventually issued and sent to requesters via express courier.

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How to get a VAT Certificate in UAE

General information/Beneficiaries

The certificate application must be submitted via the Ministry of Finance (MoF) website or smartphone application. This service requires the user to have an e-mail address, an account on the MoF website, and to complete the relevant application form. The service is available for government entities, private sector companies and individuals. It is completed within three working days, and is delivered to the beneficiaries by express courier.

Required Documents:

For authorities:

• A request letter signed by the authorised signatory
• A copy of the decree and act of incorporation

For companies:

• A request letter signed by the company
• A copy of a valid trade licence

For individuals:

• A request letter signed by the applicant
• A copy of the passport + valid permit of residence 

Service Fees (For individuals & companies):

500 Dirhams + 3 Dirhams, paid through e-Dirham Card

For submitting the application

For individuals & companies:

Pay 100 Dirhams + 3 Dirhams, paid through e-Dirham CardLost, Damaged, or Copy of Original

• Pay 100 Dirhams for issuing a replacement of lost, damaged or copy of original certificate+ 3 Dirhams, paid through e-Dirham Card

Service implementation procedures/steps:

• Create a new account on MoF website
• Fill in the certificate application
• Attach the required documents in an electronic format (PDF or JPEG)
• Verification of the application and the attached documents. If they meet the required criteria, you will receive an e-mail to inform you of the approval and to pay the remaining fees via the system
• After the payment is complete, a certificate will be issued and sent to your address by express courier. 

To follow-up on the application:

Regional and International Financial Relations Department

Responsible Officer: Ms Eshraq Saeed Mubarak

Direct Number: 04 311 0213

Email:  esmubarak@mof.gov.ae

Alternative Officer: Mr. Salman Aflatoon, Mohamed Reda Hendawy 

How to get a VAT Certificate in UAE

Tax Domicile Certificate​​

It is a certificate issued to take advantage of double taxation avoidance agreements signed by the UAE.  For Companies, Government Sector, Private sector and individuals​​

How to get a Tax domicile certificate

Duration of service provision​

• The expected duration during processing: 3 working days after getting the approval.
• The expected duration for getting the result: 2 working days through Empost.

Location of service provision

ministry’s website or ministry’s smart application​

Requirements to get the service

1. E-mail
2. Register in the system
3. Mobile number
4. individuals: to be resident in the state 180 days at least
5. Companies: the entity has practiced its activity in the State for at least a year

Registration

This services requires having a registered user on the ministry website.

Service Fees

For individuals:

For issuing the certificate: Pay 2,000 Dirhams + 3 Dirhams, paid through e-Dirham Card

The Payment for the certificate occurs, after the final approval of the request by the Ministry

For companies:

For issuing the certificate: Pay 10,000 Dirhams + 3 Dirhams, paid through e-Dirham Card

The Payment for the certificate occurs, after the final approval of the request by the Ministry

For submitting the application: For individuals & companies:

Pay 100 Dirhams + 3 Dirhams, paid through e-Dirham Card

Lost, Damaged, or Copy of Original: For individuals & companies:

Pay 100 Dirhams + 3 Dirhams, paid through e-Dirham Card

Required Documents: For Individuals:

1. Copy of the passport.
2. Copy of valid Residential ID.
3. A certified copy of (residential) lease agreement.
4. Source of income/Salary certificate.
5. A validated 6-month bank statement
6. A report from the General Directorate of Residency and Foreigners Affairs specifying the number of days the resident has stayed in the UAE.
7. Tax forms (if any) from the country in which the certificate is to be submitted.

Required Documents: For Government:​

1. A request letter signed by the authorized signatory
2. A copy of the decree and act of incorporation

Required Documents: For Companies:​

1. A copy of the trade license and partners’ attachment.
2. Establishment contract certified by official authorities (if it is not a Sole Company).
3. A copy of the company’s owners/partners/directors’ passports
4. A copy of the company’s owners/partners/directors’ IDs
5. A copy of the company’s owners/partners/directors’ permits of residence
6. A certified copy of the audited financial accounts
7. A validated 6-month bank statement
8. A certified copy of the lease agreement.
9. Tax forms (if any) from the country in which the certificate is to be submitted.

Service implementation procedures/steps:

1. Create a new account on MoF website and apply through MOF website
2. Review of the submitted documents by the department and adoption
3. Payment of certificate’s fees before the dealer
4. After the payment is complete, a certificate will be issued and sent to your address by express courier.

Quick Summary on VAT Certificate- How to get a VAT Certificate in UAE

What are the required documents and fees ?​

1. A request letter signed by the authorised signatory
2. A copy of the decree and act of incorporation
3. Pay 500 Dirhams + 3 Dirhams, paid through e-Dirham Card

 When individuals are entitled to surrender to the certificate?

When staying 180 days as resident in UAE

When Corporate have the right to surrender the certificate?

The entity has practiced its activity in the State for at least a year

 What is the validity of the audited financial accounts report?

Must be attached to the financial report of the Auditor for the year which is the certificate request, in case the certificate request for the current year be attached to the report on the past year.

What is the duration of the validity of the certificate?

The certificate is valid for a period of one year from the date of issuance.

VAT in UAE

• UAE VAT will be effected from 1 st January 2018
• UAE VAT rate will be 5%
• UAE VAT will cover all products and services
• VAT is applicable to goods and services imported from abroad.

• The website available for registration tax.gov.ae
• Business should consider the Input and Output Tax, Zero Rated Tax and exempted transactions

• • Returns to be filed at period of every three months.
  • Group registration can be done for the companies subjected to the conditions
  • Record keeping is mandatory for at least 5 years
  • Taxpayers must file VAT within 28 days from the end of the tax period

• Penalties will be imposed for non-compliance.

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/, 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.

How to calculate the Value of supplies for VAT Registration-in detail

To calculate whether the value of supplies has exceeded the mandatory registration threshold limit or the voluntary registration threshold limit, the following needs to be taken in to consideration.

• The value of taxable supply of Goods and Services: Taxable supplies means all the supplies of goods and services in UAE for which VAT is charged at the standard rate of 5% including zero-rated supplies. This does not include the supplies which are exempted from VAT.
• The value of reverse charge Supplies: Reverse charge supplies refers to supplies on which the recipient or receiver of the goods and services  are required to pay the VAT to the government.The value of such supplies needs to be determined for ascertaining the turnover threshold for VAT registration.
• Imports:The value of taxable goods and services imported on which the importer is liable to pay tax.

Understanding with a scenario

XYZ is a supermarket in UAE, They also import certain home furnishing products from other countries and supply it to the customers in UAE as well as export it to other countries. The following are the different types of supplies made by XYZ.

To ascertain XYZ eligibility for registration in UAE, taxable supplies + exports (zero-rated supplies) + imports + reverse charge supplies should be considered. Exempt supplies will not be considered in arriving at the registration threshold. The registration threshold calculation of XYZ

The turnover of XYZ for VAT registration is AED 625,000 which has exceeded the mandatory registration threshold of AED 375,000. Thus,XYZ is required to mandatorily register under UAE VAT .

What happens after I register for VAT?

Upon registration on the VAT portal, each taxpayer will be given a unique TRN and password for their online account on the website. These details are to be used to file returns online. Follow the steps below.

1. Visit the online portal of the Federal Tax Authority at tax.gov.ae
   Click the return filing option under the e-services section of the portal
   3. Log in using your TRN and password
   4. Fill in the VAT return form with the details of your business, transactions, tax liability, penalties (if any), etc.
   5. Upload the required documents, bills, etc.
   6. Verify the details filled by you and submit the form.

How to e-file your VAT Returns using a VAT Software?

UAE registered companies are expected to file their first quarterly VAT return for Jan-Mar’18 by 28th April, 2018. The VAT returns in UAE are to be filed online.The registered businesses are required to generate VAT returns in an acceptable format as prescribed by FTA and upload the return file in the portal. Therefore it is important for businesses to have a right software which helps in accounting VAT and has a capability to generate the return file in XML or Excel format

The VAT return filing process in UAE is very simple and easy. The businesses with the right tax accounting software will be able to file the returns effortlessly and save time.

The registered businesses in UAE are required to generate the VAT return File from their accounting software, login to the FTA’s e-tax portal and upload the return file. On the basis of the uploaded return file, the e-tax portal will validate the file and accordingly the details from the file will be auto-populated in the online return form. The steps to file the VAT return are given below:

Generate the VAT return file from the accounting software.

It is very important for businesses to note that the VAT return file, generated only from the certified tax accounting software, will be allowed to be uploaded in the FTA’s e-tax portal. Here, certified tax accounting software refers to that software which meets the guidelines set by the FTA.

Thus, it is crucial for businesses to evaluate the right software as certified by the FTA, so that they are allowed to generate the VAT return file easily.

1. Login to FTA e-tax portal using your login credentials and upload the return file.

After generating the VAT return file, you need to login to the FTA’s e-tax portal using the credentials. Using the e-tax portal upload option, you need to browse and select your return file.

1. Validation and Auto Fill VAT Return Details.

Once the file is uploaded, you need to click ‘Auto Fill VAT Return’ which will auto-populate the details from the VAT return file to the VAT return form in the FTA’s e-tax portal. Once this button is clicked, the FTA portal will validate or authenticate whether the uploaded file has been created by a certified tax accounting software. If the file is authenticated, only then the details will be auto-populated into the VAT return form. If the file is not authenticated, it will be rejected and an appropriate error message will be displayed.

1. Submit VAT Return

Once the VAT return file is authenticated, you are required to fill the other details required by FTA and submit the VAT return .

Consequences for not registering under VAT on time
FTA has laid various types of penalties for non-compliance. Entities which are within the VAT threshold will face a steep penalty of Dh20,000 if they fail to register within the specified time. In line with the general practice of tax authorities around the world, each non-compliance will attract penalties for the first offence and repeat offence will see significantly higher penalties and in some cases even lead to imprisonment.

By January 1, 2018, business entities in the UAE who are required to register for VAT would have to ensure that their invoices are inclusive of VAT and their tax registration number (TRN) is disclosed.

Companies should try to avoid such penalties not only because it will be an unnecessary financial burden but it will also lead to disrepute with the FTA. Precaution is better than cure. Entities may also face penalties unwittingly as the management may be unaware of the requirements and may not have adequately reported. For instance, if your systems are unable to capture the required data for filing returns, then the filing will be flawed and might lead to a penalty. A disregard to file VAT registration would mean the entity will not be able to recover and get a refund of its input credits (VAT paid for supplies).

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.

How to register Tax Groups

For the purpose of registering a tax group the representative member must already be in possession of a Tax Registration Number (TRN) for VAT, or submit a VAT registration application at the time of applying to form a Tax Group.

Each of the prospective members of the Tax group must:

• Be a legal person
• Be resident in the UAE; and not a member of another Tax group 

Registration of the Representative Member for TRN – 

1. Visit the official website of the Ministry of Finance
2. Click the option Register for VAT button
3. Select the “Yes” button for the field “Are you also applying to create or join a Tax group”
4. Complete the registration process and create your unique login id and password
5. Now you can login and reach the customer landing page
6. Click the option for “create a new tax request”
7. Fill up the required details
8. After submitting you will be directed to the payment gateway
9. Pay the online fees for VAT registration.

After payment an acknowledgement or confirmation receipt will be generated

Upon submission of the completed form, you will receive a Tax Identification Number (TIN). A TIN is not a valid TRN. It is a Tax Identification Number issued by the FTA for Tax group registration purposes and will be displayed on the Dashboard tab. As the representative member in possession of the TIN, you will now be able to apply to form a Tax group on behalf of the other prospective members.

Tax group registration by the Representative Member

The representative member of a Tax group, will see a button inviting to apply to Register for Tax group

1. When clicking on this button the Tax group registration application will commence.
2. Member will see the guide as soon as the Register for Tax group button is clicked.
3. It is recommended that member reads each of the sections carefully. Once done, check the Click here box to confirm that you have read it in order to move forward.
4. Select the “Yes” button for the field “Are you intending to apply as the Representative Member of the Tax Group?”
5. Member’s TRN/TIN and legal name in both English and Arabic will be auto-populated.
6. You can then proceed to add members of the Tax group in the next section of the registration form.
7. If one of the members of the intended Tax group is already registered with the FTA, please select the “Yes” button for the field “Is the Member already registered with FTA?”
8. You can provide the TRN/TIN of the member and click on the Verify button
9. Clicking on the Verify button will have the website verify whether the TRN/TIN entered by you is valid or not. If the TRN/TIN is valid, the legal names (both English and Arabic) of the member will be automatically populated on the registration form.
10. If a member of the intended Tax group is not already registered with the FTA, please select the “No” radio button for the field “Is the Member already registered with FTA?”. Click on the Add member button to fill out information of the member in the form.
11. Once you have completed the Add member form, click on the Add member to the group button.
12. Proceed to complete all the other fields in the registration form
13. Submit the Tax group registration form, carefully review all of the information entered on the form after clicking on Save and review.
14. Once you are certain that all of the information is correct, click on the Submit for Approval button at the bottom right hand corner of the screen.
15. The status of your application on the Dashboard will change to Pending and you will receive an email from FTA to confirm receipt of your application.

It is recommended that you save your progress as you complete the form. Click on the Save as draft button at the bottom of the screen. You will be logged out of the system after 10 minutes of inactivity

If the FTA requires any further details from you in order to assist with the verification of your application, you will receive an email notification setting out the information required from you

Deregistration from VAT.

As per FTA, organizations can be deregistered from the VAT. Deregistration means business can withdraw from paying taxes either voluntarily or mandatorily. Deregistration takes place after the approval of the FTA once the application for the deregistration is submitted to the respective authority. The authority of tax deregistration will check with the deregistration application and cancels the VAT number provided to the entity.

Voluntary Deregistration

A company can withdraw itself from paying and levying taxes voluntarily on few cases like

• If the company no longer supplies the goods which are taxable
• If the company annual turnover is below AED 375,000 even after supplying taxable goods.
• If the company is been closed permanently

In certain cases, the FTA approves the deregistration application if the reason for canceling the VAT number is valid. The authorities will check with the reason and approves the application.

Mandatory Deregistration

There can be times where the tax authorities tend to cancel your business registration which will be mandatory on an official notice. If the related authorities find that the organization no longer is making revenue of AED 375,000  or if the company doesn’t supply any taxable goods then the company needs to be deregistered from paying taxes.

After the approval of the deregistration number the authorities will cancel the VAT number provided on registration and if any company wishes to register once again have a fill the registration form once again and a new VAT number will be provided.

Transfer of a VAT number

If an entity is transferred to a new owner i.e if the business is been sold, then the VAT number also should be transferred under the name of the new applicant. Rather than transferring the business, it is better to unregister and then register on a new name. A person who wants to deregister can visit the nearby FTA office, fill the application form and follow the instructions given by the authorities. 

Need to upgrade to Reach online VAT Accounting Software :

Reach accountant software is properly designed to fit all of the desires for a success running of the enterprise. The software may be used in industries ,buyers ,producers, outlets,  workshop ,commercial enterprise projects and so forth. It’s far an accounting software program which can routinely manage your ebook of accounts, taxes, inventory, sales, purchases and many more  online speedy and securely

Top Features of the Reach Online VAT Accounting Software are:

• Accounting Management: All functions relating to accounts are inbuilt with the software. You can manage your Accounting Ledgers, Bank & Cash Operations, Purchase & Sales Estimates, Warehouse Allocations, Expense Recording, Expense Grouping, Payments – Part or Full, Journal Entries, Income and loss a/c, Balance sheets, Receipts – Part or Full, Contra Entries, Financial Reports, Day book.

• Tax Management: Our accounting Software automatically calculates the taxes relevant for every bill created. The Software is designed as per the government norms for calculation of VAT. It also has the option to add any number of taxes relevant to the business. In case of change in tax percentages a change it in the software on your own. All you have to do is add your tax percentage and our software will calculate the taxes automatically. This multiple tax scheme can also be applied to multiple products on a single purchase.

• Income Management: The Company can create Quotations then the same can be converted as a Sales order or Pro-forma invoice or Invoice. From Invoice you can create Receipts as well. Accountants will be able to know what payments have been received and what are pending in the reports. You can also set reminders for receiving payments.

• Expense Management: You can create Purchase Orders then the same can be converted as bill or payments. You can also create Debit notes for purchase returns. Accountants will be able to know which purchase bills have been paid and which are pending in the reports. You can also set reminders for making payments.
• Invoicing: Generates VAT compliant invoice of the company in the specified design as requested by the client or can choose from the available templates in the software. It also converts quotes to invoice .One of the features is the software can convert the Foreign currency invoices to base currency and further calculating the VAT at UAE standard rate.

·         Print Tax Invoice In Arabic: Reach software lets you print invoices in Arabic, English or both, as per the mandated guidelines of GAZT and FTA.

• Auditor View: Full-fledged Financial reports, Tax reports VAT reports, read process by auditor, with e-filing options, PF & ESI Reports, Tax Consulting Modules are some to be named.
• Check Post for VAT returns: As the software has been designed exclusively to aid individuals and entities to be VAT compliant in UAE, the set of rules and regulation laid by FTA (Federal Tax Authority) of UAE are embedded in the software. Hence any process error will be popped up by the application can be viewed .For instance wrong Tax Registration Number, incorrect taxable figure, wrong taxation period.
• Automatic Update on Tax legal Sections: As the Reach software are cloud computed software gets upgraded to update any revised tax laws and section if any in future.
• Computation Of VAT Returns: The software is inbuilt with all the detailed crucial information  on tax computation Tax Assesee can  fetch all the details of all the taxable transactions It lists down transactions which are included and excluded in the VAT return  calculate input tax, reverse charge and output tax to avail claim if any 

• Filing Of VAT Returns: The registered businesses in UAE are required to generate the VAT return File from their accounting software, login to the FTA’s e-tax portal and upload the return file. On the basis of the uploaded return file, the e-tax portal will validate the file and accordingly the details from the file will be auto-populated in the online return form. Reach VAT software is designed to ease the process of filing returns and comes under the purview of FTA prescribed set of rules and regulations.

• * VAT Reports etc.
• Calculate VAT automatically.
• VAT support in Sales, Purchase, Sales and Purchase returns, Journal entries.
• Generate Federal Tax Authority compatible tax reports.
• VAT Paid (charged by suppliers) and Vat Collection (Charged to customers) Analysis.
• Transaction wise details of VAT paid and VAT collected.
• Attach every Vendors/Customers VAT number and other details.
• VAT supported for Goods (stocked) and Service (non-stocked) items.
• Online application accounting.
• VAT Account Reconciliation, VAT Collection & VAT Paid analysis report.
• Report export to excel and other standard formats.
• VAT returns statement compatible with Federal Tax Authority standards.

Online accounting VAT software enables you to file vat returns, manage accounts and other business operations from any geographical area be it at the comfort of the house.

• Receipt: Receipts can either be manually entered or imported it in excel format easily.
• Payments: Payments can either be manually entered or imported it in excel format easily.
• Multi Company: Manage business through comfort of the smart phone.
• Tally Import: Tally files can be easily imported to Reach Software of various periods and manage business easily.
• Auditor’s Report: Full Financial Report are available,Read process by Auditor,Tax Reports,VAT Report with e-filing options,PF & ESI Reports,Tax Consulting Modules are some featuress mentioned.
• Mobile Application: Access business information through tabs and android smart phones, pick photos of expense vouchers and attach to expenses, daily profitability and other key reports can be viewed on phone.
• Bank Synchronization: Bank Statements can be imported in to Reach software through excel files.
• Security: There is complete security of data stored in the hard disk. Data can be accessed and control by creating access restriction. One time password facilities also ensures a check in the log in to the website.

• Run Business from anywhere: The business can be run access data from anywhere at your comfort. Just like checking mails from the laptop or systems.

• Free and Automatic Upgrades: At Reach Accountant you will be provided free services of upgrading the software frequently with new features and use it absolutely free.

• No investment in expensive hardware: The software is browser based. It just requires internet connection which can be connected to multi computers without using LAN and servers.

• API: The client can integrate the existing software with Reach accounting application ,

• Automatic Data Backup: Reach stores all the data in servers offsite with regular backups. Hence business information is safe and secure

·         User Interface & Complexity:The software is designed to make its use friendly and easy,no cumbersome process to operate the application and software.

• Scalability:It is an VAT accounting software which can scale with your business needs. . Some software companies offer only one version of the product and some have progressive versions depending the business type or size. Reach Accounting software offers both integrated an entry level version as well as a feature rich version which you might not need for the current business processing but will definitely need in future for business development.

Top Two Features of the Reach Accounting Software

• Outsourced Accounting: The software enables to finish the outsourced accounts in less than 30 minutes.

• Real Time Accounting: Allows client to record sales and purchases online, while finalizing accounts that is checking the Audit trail, providing MIS reports, checking Tax reports, printing financial reports and filing taxes.

Technology Used

Reach has implemented the latest technology Cloud Computing to handle  day to day business transactions just  a click away from your browser from any part of the world.

Cloud Computing is a concept through which organizations can manage their data centres, processes and applications online via internet on the scheme of pay for use basis. Many of today’s small businesses find great advantages when adopting a virtual office environment. Rather than maintaining one centralized business location, employees are given the opportunity to work from home and connect via computer. Virtual offices can stretch across the country, or even exist within a small geographic area while still providing benefits to both employees and employers. Yet certain business functions need to be managed differently in a virtual environment. When it comes to accounting, a cloud system can improve virtual office management, especially for tasks such as expense tracking and financial report consolidation.

Benefits of Cloud Accounting

1. Spread the cost of the software by making payments by monthly subscription instead of one lump sum.
2. All the upgrades for cloud accounting software are carried out by the supplier at no extra cost, so you are always on the latest version.
3. You can access cloud accounting software anywhere that has an internet connection, so no need to use a particular computer or be stuck in the office.

As the name suggests, all the data is stored securely in “the cloud”which means on the supplier’s bank of servers, continually backed up, so you never have to worry again about using up your own hard-drive or taking regular backups.

Best of all, with cloud accounting software, your accountant can share your data, so they can help you if you are stuck on recording certain transactions in your accounts, like the purchase of a new laptop.  They can post their year-end journals directly, so your data is always up to date, but more importantly we can be more help to you.  For example if you would like your accountant to check the figures for your VAT Return or even file it,or prepare some management