UAE VAT for person residing outside UAE
Do you really wanted to know whether a person residing outside UAE is required to register for UAE VAT in UAE under UAE VAT law?
We need to first understand what "Non-resident under UAE VAT law" means. Non-resident under UAE VAT law means any person who
- does not own a Place of Establishment or Fixed Establishment in the UAE and
- usually does not reside in the UAE.
As per the relevant provisions of UAE VAT law, overseas companies and non-resident suppliers that make taxable supplies in the UAE will be required to register for UAE VAT unless there is any other UAE resident person who is responsible for accounting for UAE VAT on these supplies.
In such cases, overseas companies and non-resident suppliers making any taxable supply of goods and services in UAE, have to register themselves for UAE VAT in UAE prior to making their first taxable supply of such goods and services in UAE and charge and collect UAE VAT on such supplies from their first supply itself taking place.
This exclusion may apply, for example, where a UAE business is required to account for UAE VAT under a reverse charge mechanism in respect of a purchase from a non-resident.
It is also to be noted that there is no minimum threshold for registering for UAE VAT in the case of a non-resident and hence he should register under UAE VAT even if there is only a single supply.
Let us understand the case through some examples:
Kindly make a note that the names of the persons used in the below examples are just taken for reference and better understanding of the reader, that too unintentionally and we do not intent to hurt anyones feeling or abuse anyone.
- Mr. Omkar Kulkarni is a resident of India and he is providing consultancy services to Mr. Abdul Hussain, who is based in the UAE. In this case, if Mr. Abdul Hussain is not registered under UAE VAT laws, then Mr. Omkar Kulkarni is liable to register under UAE VAT laws. However, if Mr. Abdul Hussain is registered under UAE VAT laws, then he is liable to pay VAT under reverse charge mechanism in UAE and hence Mr.Omkar Kulkarni need not register under UAE VAT laws as his client takes the .
- M/s XYZ Jewellery Pvt Ltd, an Indian company engaged in trading of jewellery wish to sell its products to the customers in UAE through e-commerce platform. For the said purpose, they want to register as a vendor on e-commerce platform of M/s ABC LLC, an e-commerce operator company resident in UAE. However, M/s ABC LLC (e COMMERCE Platform ) informs M/s XYZ Jewellery Pvt Ltd. that in order to get registered on their e-commerce platform, M/s XYZ Jewellery Pvt Ltd would first need to get register under UAE VAT laws. .
This is a very key provision under UAE VAT laws which every non-resident needs to be aware of if they have their clients in UAE.
Why is this so important to know about UAE VAT ? The reason behind this is that Federal Tax Authority has the right to charge heavy administrative penalties on the person who breaches the provisions of the Federal Decree law.
For any queries with regards to UAE VAT law, you can call us on +91 7738990548 or reach out to us at [email protected]
- Refer to our other articles
- How to start your business in UAE (https://www.linkedin.com/pulse/start-your-business-uae-prosperise) and
- Corporate taxes in UAE (https://prosperise.in/corporate-tax-in-UAE.html)
Do visit our website for further information on establishments in UAE/Singapore.
This article is prepared on the basis of my hands on experience and information provided in the Federal decree-law No. 8 of 2017 on value added tax introduced by Federal Tax Authority. The said federal decree-law can be viewed by clicking on following link: https://www.mof.gov.ae/En/lawsAndPolitics/CabinetResolutions/Pages/CabinetDecisionNo52OF2017.aspx