How to Register For VAT as A Freelancer in the UAE

How to register for VAT as a freelancer in the UAE

How to Register For VAT as A Freelancer in the UAE

If you are an entrepreneur in UAE, you must be aware about the introduction on VAT in UAE. Its’ been already few months that businesses are complying with VAT regulations since its introduction from January 1, 2018.

Big corporations due to their size and expertise are adapting well to the rules. However, there is some amount of misunderstanding amongst freelance professionals and self-employed individuals whether they are liable for VAT registration or not? And if yes, what is the procedure?

In this article, we will explain an easy step by step process for VAT registration in UAE.

Step 1: Check whether you are liable to register for VAT or not.

Businesses are split into three brackets for the purpose of VAT,

  1. If, Revenue > AED 375,000  =  MUST Register
  2. If, Revenue between AED 187,500 – AED 375,000  =  Optional to Register
  3. If, Revenue < AED 187,500  =  CANNOT register

Revenue includes taxable supplies, exports (zero-rated supplies), imports and reverse charges supplies. Also, in order to apply for VAT registration, freelancer must have received more than AED 187,500 income in the last 12 months.

Step 2: Obtain a License

If a freelancer is not currently licensed, he must obtain a license which requires the permission of an employer. There are numerous free zones in UAE that offer freelance licenses.

Step 3: Register Online

After procuring license, freelancer can proceed to VAT registration process which is carried out online.

  • Go to FTA portal.
  • Create a new account to log in by providing name, setting password and verifying the e-mail
  • Once login, register for VAT by providing the following details,
    1. Trade license
    2. Certificate of Incorporation
    3. Description of business activity
    4. Memorandum of Association (MOA) or Articles of Association (AOA)
    5. Sponsor agreement (if applicable)
    6. Revenues of last 12 months
    7. Projected future revenues
    8. Freelancer Passport and Emirates ID copy
    9. Bank account details
    10. Customs details (if applicable)

After submitting all the required details, wait for certain time for your registration approval and allocation of TRN (tax registration number).

Step 4: Maintain your financial records

All freelancers should maintain their financial records timely and accurately; also those who are not required to register by law. Why?

Because VAT is going to be applicable to the entire ecosystem. Even if a freelancer falls into the third category where his turnover is not crossing the threshold, there are chances that his customers and vendors are falling in VAT bracket and they will ask to be issued invoices in a specific manner or in particular form of transactions which means that businesses will have to step into mainstream and update their accounting systems right away.

Important Points to consider for VAT Compliance

  • TRN has to be mentioned on all invoices
  • All invoices should be sequentially numbered
  • Total cost and VAT should be disclosed separately so that people are aware of VAT component

VAT compliant software

There are plenty of VAT compliant soft wares in the market that can generate relevant invoices. If a freelancer has difficulty adapting to new software, he can go for training or outsource his accounting work to another company who manages freelancer’s accounts on his behalf.

Step 5: File your returns on time

Freelancer is required to file his/her returns online each quarter.

  • Calculate Output tax – tax collected through invoicing
  • Calculate input tax – tax paid to suppliers
  • The difference between the above two is what a freelancer has to pay to government.

Make sure that your returns are accurate because there are heavy penalties in case of discrepancy or error.

Need Help?

Contact Business Setup Consultants Dubai representatives for further guidance and support.

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