UAE VAT Registration Process

Transcription

1 UAE VAT Registration Process UAE VAT Registration Process LNB News 16/04/ Published Date 16 April 2018 Jurisdiction United Arab Emirates Related Legislation Cabinet Decision No. 52/2017; Cabinet Decision No. 56/2017; Cabinet Decision No. 59/2017; Federal Decree-Law No. 8/2017 Relevant Companies BSA Ahmad Bin Hezeem & Associates LLP Abstract The UAE VAT regime was implemented on 1 January 2018 putting into operation Federal Decree-Law No 8/2017 on Value Added Tax and Cabinet Decision No 52/2017 on the Executive Regulations to the aforementioned law (together the VAT Law). With the promulgation of Cabinet Decision No 56/2017 on Medication and Medical Equipment subject to Tax at Zero-Rate and Cabinet Decision No 59/2017 on Designated Zones there is more clarity regarding the obligations upon businesses to register under the VAT Law. A number of business entities, whether companies, individuals or otherwise, have been under the impression that their registration was not mandatory due to the nature of their supplies or that they were unaffected as they conduct business in a free-zone and have thus elected not to register. The registration deadline for business entities has been extended until 30 April 2018 and companies and individuals are encouraged to register and take advantage of the amnesty granted to register without penalty before this date. Once a business entity has established its registration obligations, the processes involved in registering for VAT in the UAE set out below can be followed. Analysis Page 1

2 The Federal Tax Authority (FTA) established an online portal for registration and which is the only vehicle available for registration. The FTA Online Portal can be accessed via HERE IS THE STEP BY STEP PROCESS ON HOW TO REGISTER Before you commence please ensure the following information and documents are at your disposal: Documentary proof the person completing the process has authorization to sign on behalf of the business; Copies of all the business trade licenses in the UAE, especially the trade licenses for every branch; The name of the business entity (including trading name if applicable) in both English and Arabic; Certificate of Incorporation of the business entity or supporting documents for the business enterprise s formation; Full information of all the owners/shareholders/partners of the business enterprise (including Emirates ID and passport copies); The full information of the manager of the business entity (including the Emirates ID [if a resident of the UAE] and a passport copy and full name of the manager in both English and Arabic); Full information on the business enterprise s address, the type of business conducted and contact information; The full information of the appointed tax agent in the case that the business entity which has registration obligations inside the UAE (including name, address and contact details); Full details of the bank account of the business entity (including IBAN number, account number, account name, the address of the bank and the details of the holder of the account if not in the name of the business enterprise; Information about other company s/ventures the owners/manager/directors have been involved in, in the five years preceding registration; Audit report or non-audited financial statements or a self-prepared calculation sheet of income and expenditure for twelve months preceding registration; A revenue forecast and expenses forecast for the month following registration (if applying for voluntary registration); and Page 2

3 In the event that the business entity is exporting/importing from or to other GCC states, then: Name of the GCC member state(s); Tax Registration Numbers of entities exported to or import from (if available); The estimated value of imports and exports per year (in AED per year); and Details of Customs Authority Registration (including scanned copy of Customs registration number). Once the above documents are available, then the process can proceed further as per the steps below. It can be noted that due to the number of applications currently being processed by the FTA, they have foregone the initial requirement of certain of the above documents by amending the website format from time to time, however the FTA will still require these documents as some stage and it would be prudent to have them all available for when they are requested, as they would require delivery within two days of request. STEP 1: Create an e-services Account: Follow the following steps: Login to FTA Website (on above link); Click Sign Up ; Provide address; Set a password of between 6 and 20 characters (using at least each of one number, one letter and one special character #, $, % and *]); Complete alphanumeric verification test provided on website; Provide login security details per questions asked on website (i.e. security question and answer hint for password recovery); Click that you have read and accepted the Terms & Conditions relating to the usage of the website for e-services; Click Sign Up button; Tips and Notes: It is advisable to create an address specifically for VAT correspondence or use an address Page 3

4 designated just for the e-services Account as all correspondence from the FTA will received to this and all correspondence to the FTA must be addressed via this address; If registering more than one entity, the system will restrict you from using the same address for the different entities and separate addresses will be required for each separate registration; and Verification of Account: After the above process is complete an will be sent by the FTA to the registered address in order to verify your address. The process set out in the verification must be completed within 24 hours of receipt thereof, failing which the verification link will expire and the process will have to be restarted. You will now be ready to use the e-services Account for the next Steps. STEP 2: Log in and Register: Once the e-services Account has been created, the user can login to the FTA Website using the address and password created in Step 1. On opening the e-services Account four options will be reflected, namely to: Register for VAT; Create a Tax Group (as defined in the VAT Law); Register for Excise Tax; and Register as a Warehouse Keeper (as defined in the VAT Law). Only with the procedures for VAT Registration will deal set out herein as the focus of this article. Select the Register for VAT option and then read and accept the terms and conditions as directed. After acceptance of the terms and conditions the application will follow. The application consists of seven different pages requiring data entry and the upload of documents. The website pages are: About the Applicant; Details of the Applicant; Contact Details; Banking Details; Page 4

5 Business Relationships; About the VAT Registration; and Declaration. A discussion of the individual pages are discussed in more detail below in Step 3A. At the time of this article, the Banking Details page and the Business Relationships page have been made optional fields, however this may be changed to compulsory fields again in the near future. On successful registration, a Tax Identification Number (TIN) and a Tax Registration Number (TRN) will be generated for the applicant. Tips and Notes: If you have already obtained a TRN for Excise Tax and now you are registering for VAT, your existing TRN with basic information should automatically appear in the provided fields. If you have not yet registered for Excise Tax and wish to do so along with VAT, you will need to register for their VAT or Excise Tax and await the outcome of the application prior to registering for the other. If you wish to register as a Tax Group you will have to first register for VAT and indicate that you wish to create a Tax Group. A primary representative entity will have to be nominated and then join each other business entity to the Tax Group. Each member of the Tax Group will obtain a TIN and one TRN will be provided to the group once all the entities are joined. Step 3A: About the Applicant: On this page the applicant must indicate the following: The type of legal person it is of either a natural person (i.e. an individual or sole trader) or a legal person (e.g. a limited liability company or other incorporated body) or another form of entity (e.g. an unincorporated body such as a charity or a club, a partnership or a trust); Whether the registration is mandatory or voluntary; Whether or not a trade license is held in the UAE; and Whether or not the applicant wished to join a Tax Group. Page 5

6 Tips and Notes The type of legal person will depend on the legal persona of the applicant, such as in the case of individuals renting out commercial property (outside of the designated zones) or a limited liability company supplying of services to clients anywhere in the UAE. Mandatory Registration: A business enterprise is required to register under the VAT Law, if the business entity is resident or has a permanent establishment in the UAE and is making taxable supplies of goods or services in the UAE and either: has had a turnover of more than AED 375,000 in the last twelve months; or has an expected turnover of more than AED 375,000 in the next thirty days. Voluntary Registration: If a business is not mandated for compulsory registration, the business entity will be eligible to apply for voluntary registration if either: the business turnover or expenses (which would be subject to VAT) were more than AED 187,500 in the last twelve months; or the business turnover or expenses (which would be subject to VAT) will be more than AED 187,500 in the next thirty days. It is important that the above values are calculated and determined on taxable supplies (as defined in the VAT Law), and if a business supplies goods that are exempt or if the turnover is metered from sale of exempt goods, this will respectively not qualify as taxable supplies or indicate the revenue from such taxable supplies. Prior to application for registration the VAT Law and particularly the rules regarding place of supply should be fully understood in order to understand the business s registration obligations. Along with this the registration obligation of foreign companies must also be clearly understood. If a business enterprise holds a trade license in the UAE, information about your trade license will be required, otherwise there will be no requirement to provide additional information. If a business has more than one trade license, the business will have to indicate such and complete the further requested information concerning these other trade licenses, such as those for branches which will fall under the registration of the parent entity. Page 6

7 A Tax Group (or VAT group) [where all the members of the group conduct business under the same TRN and may avoid paying VAT on inter-company transactions] can be created between two or more legal persons. The requirements, amongst other requirement as may be determined by the FTA, are that: each member must be resident in the UAE; and that they are associated and which meet specific related parties and control criteria. Step 3B: Details of the Applicant: This page is a more in-depth request for information and the applicant must submit by completion and upload of the following: Name and Identity Details of the Applicant: This comprises the name of UAE legal entity (natural or legal person) and trade name (if applicable) in both English and Arabic; The full name, in both English and Arabic, and details, such as the Emirates ID and passport number of the manager of the business entity; The name of the authority that issued the business trade license (select from dropdown menu); The trade license number; The trade license expiry date (select dd/mm/yyyy); The trade license; and The Certificate of Incorporation. Tips and Notes Certain details required for this page may be required to be entered more than once under different headings and also on different pages, so keep them available. As the legal name of the entity and that of the manager, and if resident in the UAE this must be provided in both Arabic and English, which should be reflected as per the Emirates ID or on the trade license, however it may be necessary to obtain the assistance of a recognized translator for this purpose should these not be reflected on any officially issued documents. If there are more than one trade license for a single entity, in which case ALL the trade licenses must be included. Page 7

8 The manager would be either the manager as reflected on the trade license or alternately may be a director, partner or shareholder. In limited cases (and only in these cases) where there is no trade license or a certificate of incorporation (such as an owner of commercial property in an individual capacity) such supporting documents such as the individual s Emirates ID, passport and proof of residence should be uploaded. STEP 3C: Business Address and Contact Details: This page is to submit the contact details of the applicant. There is no documentary evidence required and most of the information is reflected on the documents already submitted on previous pages. The information required is the business entities : Addresses: This will include the building name and number, street name, city, emirate, P.O. Box and phone number. Tips and Notes The address of the principal place of business of the legal entity must be provided and not that of your accountant or other representative. In cases where the business entity is situated outside of the UAE, the address of the Tax Agent appointed as the representative taxpayer for the business may be used. In the case of an individual, the business address and by default the residential address of the individual may be used. Step 3D: Bank Account Details: The required bank details are: Details about IBAN, bank name, branch name / location of the bank and account holder's name. Tips and Notes At present this is not a mandatory field however if these details are available they should be completed as the FTA will require these details as some stage. The bank account held in the UAE with a commercial bank licensed in the UAE. The account name need not match the business entity s name. The accuracy of these details is essential. Step 3E: Owner s and Director s Business Interests Page 8

9 The FTA requires an answer to the question whether the business entity, or any of its directors or partners are currently, or have in the past 5 years been involved in, any other business entity within the UAE, either individually or as a director or partner in that business. In the event that this is the case, the following needs to be submitted: Partner / Director details, including Emirates ID and passport; Details of other businesses with which the involvement exists, and accordingly the following is required: the legal name of the business the relationship is (or was) with; Confirmation if the business still trading; the TRN of such business (if available); and copies of trade license(s) of these businesses. Tips and Notes Ø At present this is not a mandatory field however if these details are available they should be completed as the FTA will require these details as some stage. Step 3F: About the VAT Registration: This is an important step and the information supplied in this step is vitally important as it is the core information about the business entity. The information required on this page is: The primary activity (chosen from dropdown menu); Any secondary business activities (chosen from dropdown menu); The business turnover for the past twelve months; Expected turnover in the next thirty days; Expenses in the past twelve months; Expected expenses in the next thirty days; Declaration regarding the supply of exempt supplies; Page 9

10 Declaration if input VAT may exceed output VAT and that refunds may be due; Declaration regarding the business entity s intentions to import and/or export, which require the submission of the following information: Name of the GCC member state/s for import from or export to; Enter TRN of the imported or exporter in the GCC member state (if available); The estimated value of imports (AED per year); The estimated value of exports (AED per year); Details of Customs Authority Registration (including the upload of scanned copies of Customs Registration Number issued by Customs Authority); The upload of scanned copies of the Emirates ID, passport and authorization document of the authorized signatory; and Details regarding the intention to make an application for exemption. Tips and Notes The dropdown menu lists business activities and if the business activity is not listed there is an option for other business activities in which case the activity as per the trade license should be inserted. It is important to note that in declaring the turnover for the past twelve months this is calculated for the twelve months immediately preceding the application date and not the previous financial year. Only taxable supplies must be included in the turnover. The turnover and figures must be reported in UAE Dirhams (AED). If the business does not have a fixed place of establishment in the UAE and the business customer is responsible for accounting for the VAT under the reverse charge mechanism, the value of imports must not be included. If a business has been purchased, the taxable supplies made by the acquired business must be reported. Page 10

11 Scanned copies of documentary proof must be uploaded to substantiate the submitted information. Accepted evidence includes the audit reports, non-audited financial statements, self-prepared calculation sheets and revenue forecasts. Expenses in the past twelve months, must be vatable expenses and proof can include an audit report or an expense budget report, even self-prepared but should reflect the items in a monthly format. The upload capacity for scanned items is limited to 2Mb and files that exceed this will require that they be converted to smaller size. When applying for voluntary registration the expected expenses within the next thirty days must be reported in similar format as stated above. The FTA must be informed if the business intends to offer/make exempt supplies/goods, as this is a criterion which may determine rejection of the application for registration. It is important also to remember that in the event of a business making both vatable and exempt supplies, the input VAT of the business must be apportioned between the vatable and non-vatable output VAT, usually in proportion to the respective turnovers received therefrom. When indicating if input VAT may regularly exceed the output VAT on taxable supplies, the FTA requires that an indication is given if the business will generally be making a payment to the FTA or receiving a refund from the FTA. Exports to countries other than GCC member states do not require reporting in this section. The following supplies are eligible for exemption: Exports; Certain international transportation services; Certain aircraft or vessel transportation; Certain investment grade precious metals; The first supply of certain real estate; Crude oil and natural gas; and Certain educational and healthcare services. Page 11

12 To understand the application and implication of these exemptions, further examination of the VAT Law is necessary. Step 3G: Declaration: The declaration entails submitting the details of the authorized signatory and include the names in both English and Arabic again, the UAE ID and the passport details and upload proof of the aforementioned. Once the above is complete you may elect the preferred channel of communication and the language of communication. The application may be saved and reviewed prior to submission. Tips and Notes Saving and reviewing the registration before final submission is very important. De-registrations and amendments to Tax Groups may be the outcome of incorrect applications, which are timeous and may leave the business with compliance requirements such as the submission of returns prior to the correction being processed by the FTA. The FTA can be called on or ed on in the event of any difficulties and enquiries. Once registered the business will be assigned a TRN and be advised of the date of the first Tax Return and the dates for submission thereafter. On login after registration, the services available on the e-services Account are: the Dashboard ; My Profile ; and Downloads. This will enable you to attend to various further matters on the website directly. It is advisable to login regularly to check for any updates. Page 12