An efficient system of taxation is one of the important needs of every country. One form of taxation that is popular across most of the countries in the world is VAT. In this article today, we are going to discuss many things about VAT. For example, “Vat in UAE“, the online portal of FTA UAE, the value of VAT in UAE, the registration process for VAT, and many other important questions. Here, I would like to mention that we have divided all the sections in the questions related to them, so it would be easier for you to find what you want to know.
What is FTA in UAE?
FTA stands for Federal Tax Authority in UAE. The FTA UAE actively supports the business communities to know about tax in an easily accessible and straightforward way. Their vision is to actively ensure the system of taxation in order to bring the well planned and organised businesses in the Uniter Arab Emirates. There are e-learning guides available on FTA online community/website to achieve this purpose. To add more, there are business bulletins and public rulings that are avaliable online.
What is VAT in UAE?
VAT is basically a type of consumption tax added to goods and services at each point of sell. A country implements this tax system to increase its revenues. This system of taxation exists in almost 180 countries including UAE. This tax is applied mostly on the goods and services which are sold and bought. At each stage of supply chain, VAT is charged by the businesses according to the VAT rate in that country. “Output Tax” is actually the VAT charged by businesses from their customers. As per the orders from FTA UAE, the standard rate of VAT is 5% while zero rate of VAT in UAE is 0%.
How does the VAT work in UAE?
The registered companies for VAT in UAE popularly known as “Taxable Persons” charge VAT from their customers on the produced items of goods and services. The taxable persons collect that VAT, pay this over to FTA online (or any other method), and submit a tax return. The suppliers then charge VAT from businesses and companies when they buy goods and services.
How to add VAT to goods and services?
An example of a 5% VAT in a business can occur step by step like this. This is applicable to any VAT system including VAT in UAE. A manufacturer of of coffee buys the coffee beans raw material from a dealer. Suppose the raw material is worth 500 AED. At this point of supply chain, this dealer charges the manufacturer 5%. So, the price for manufacturer would be 550 AED. The manufacturer adds value to it by preparing the coffee beans. When the retailer buys the ready made coffee beans, he/she would pay VAT to the manufacturer. Later, when a seller of coffee buys it from retailer, he/she has to pay VAT by adding 5% to the value of that product. This chain continues till the customer or consumer. We see that VAT value is added for times in this process, (a total of 20%) which is paid to the government.
Can I charge VAT while waiting for registration?
The answer is probably no. One cannot charge VAT while his company/business is not registered yet. In the section “how to register for VAT in UAE, we have written the details of registration process.
How can I know my TRN number in UAE?
As we mentioned above, only registered businesses can charge VAT in UAE. Those “taxable persons” who registers themselves on FTA online portal might be individuals, companies, partnerships, clubs and associations. When they register themselves, they receive a tax registration number called TRN. Registration is must if the total value of a business exceeds from a certain value. These details are available on FTA online portal or one can ask from the relevant authorities. However, a business company can register itself voluntarily if its total value do not meet the required value. In this case, they would be able to get certain benefits. They would be able to recover VAT in UAE from their expenses. Also, they obtain the TRN from FTA online portal for getting cash flow advantages during the purchase process from outside UAE.
How to verify TRN number?
It was necessary to be a registered user on FTA UAE website. However, one can verify TRN number without necessarily being a registered user. So, when a company charge you VAT at some point, you can verify the TRN number through FTA online portal. There are some easy steps which you should know for this purpose.
- First of all, visit the FTA website
- There is a tab Getting Help
- When you hover the pointer over this, you would see TRN Verification
- Click on it and enter the TRN number you want to verify
- Then enter the security code
- Click validate
- If the TRN number provided by the supplier/service provider is correct, the name of correspondent will appear on the screen in both English and Arabic language.
- There will also be the registration number provided by Federal Tax Authority FTA UAE
How to contact Federal Tax Authority FTA UAE?
A person can contact the Federal Tax Authority in many ways. One can email them at “firstname.lastname@example.org”. In addition to this, a person can call them on 600 599 994 or 04-7775777. In case, you are facing any technical issue or want to know any formation, you can ask them through these reliable sources. There is trained staff to answer the queries in your mind. Also, they have information available on their website.
A Reminder Note:
As you may know that we are not an official authority. UAE EMPLOYMENTS is an online community that share information and facts in a simple and easy way. On this page, you find the answers like “what is VAT in UAE”, its registration process, information about FTA Online portal, FTA UAE and its role in the taxation system. We hope you would get all the answers related to these topics. In case, you want to know something, share an idea or give your feedback, please do not forget to comment. It encourages us a lot to be here and keep sharing the information for you!