TaxSavvyAE

Voluntary registration to recover input VAT

My sales are small but I spent a lot on fit-out with VAT. Should I register voluntarily?

The situation

You can register voluntarily if taxable supplies or taxable expenses in 12 months pass AED 187,500. Once registered you can recover input VAT on business costs, but you must charge VAT and file returns.

The law

  • Art 17, Federal Decree-Law 8 of 2017: Voluntary registration above AED 187,500 of supplies or expenses
  • Art 55, Federal Decree-Law 8 of 2017: Input tax deducted when holding a valid tax invoice and intending to pay

What it means for you

Example: a new cafe spends AED 600,000 plus AED 30,000 VAT on fit-out before opening. Registering voluntarily lets it recover the AED 30,000 if the costs relate to taxable sales. A voluntary registrant generally cannot deregister within 12 months, so commit to filing.

What to do

  1. Total taxable expenses and supplies for the last 12 months.
  2. If above AED 187,500, compare VAT recoverable with compliance cost.
  3. Apply on EmaraTax.
  4. Keep tax invoices for all costs.

We can do this for youVAT registration on EmaraTax: threshold test, voluntary registration, non-residents and tax groups: AED 950

Related