VAT for small companies, without the jargon.

When to register

• Mandatory once taxable supplies in the last 12 months exceed AED 375,000, or are expected to within the next 30 days
• Voluntary from AED 187,500 of supplies or taxable expenses

Zero-rated supplies count towards the threshold. Exempt supplies do not. The standard rate is 5%.

Tax invoices

A tax invoice shows your TRN, the customer's TRN if they are registered, the date of supply and the VAT per line. It has to be issued within 14 days of the supply.

A simplified invoice can be used in some cases, for example for customers who are not VAT registered, or for amounts up to AED 10,000.

Returns

The FTA assigns your tax period, usually every 3 months. The return and payment are due within 28 days of the end of each period. A return is needed even if there were no transactions.

Recovering VAT on expenses

You can recover VAT on business expenses if you have a valid tax invoice and have paid, or intend to pay, the supplier within 6 months.

Some VAT cannot be recovered, such as entertainment for people who are not employees.

Records

Keep invoices and records for at least 5 years, longer for real estate. If the FTA audits you, it can ask for an FTA Audit File generated from your books.