Telephone Numbers
Telephone Numbers
VAT Refund and Declaration in Dubai
For detailed information +90 542 381 3868 'Call.
Are you running a VAT-registered business in Dubai, UAE? At the end of every tax period, you will be required to submit a 'Value Added Tax (VAT) return' to the Federal Tax Authority (FTA). The VAT return shows the value of the purchases and supplies a taxable person has made during the specified tax period, indicating the person's VAT liability.
Article 64 of the Executive Regulations of the VAT Decree-Law states that the Federal Tax Authority expects to receive the VAT Return within a proposed timeframe - 28 days immediately following the end of the tax period. Furthermore, failure to file the Value Added Tax return or late filing can lead to serious consequences.
So, let's have a comprehensive analysis of the VAT return filing process. Below, we have briefly explained the most common questions and misconceptions people have on this subject.
Dubai, UAE, charges 9% VAT at the point of sale. According to the VAT registration guidelines, registration is categorized as voluntary VAT registration, mandatory VAT registration, and exemption VAT registration.
Not every business needs to get VAT registration; only those whose value of taxable supplies in the previous 12-month period exceeded AED 375,000, or who will exceed the threshold in the next 30 days.
Most businesses in Dubai, UAE, are required to file a quarterly VAT return if their annual turnover is below AED 150 million. On the other hand, if the annual turnover exceeds AED 150 million, a specific class of business is expected to file a VAT return after every month.
It is noteworthy to know that the FTA may assign a different tax period for a specific class of business at its own discretion.
Registering your business for value-added tax is an online process that you can only do through an FTA portal.
In Dubai, UAE, the FTA has not yet adopted any guidelines that allow for offline VAT return filing. On the FTA's portal, there is a VAT 201 form where businesses can file their VAT returns at the end of the tax period. On behalf of taxable persons, registered tax agencies based in Dubai can file tax returns to help businesses meet VAT compliance without any obstacles.
After logging into the FTA portal, you need to check the following:
However, if you still have questions regarding VAT returns in Dubai, UAE, you can contact the leading tax consultancy, World Company Setup. When it comes to helping you file a VAT return, turn to the best team of audit and tax consultants. World Company Setup Auditing is one of the most experienced firms when it comes to taxation and financial advisory in Dubai, UAE. We make sure to evaluate every single important factor before filing your VAT return in Dubai, UAE. We calculate every single item of purchases and sales, and this ensures 100% accuracy.
Get ready to receive heavy penalties from the Federal Tax Authority if you do not comply with the Dubai, UAE VAT Return laws.
Some common VAT administrative penalties related to the return filing include the imposition of a penalty of AED 1,000 on the VAT registrant who fails to file the return within a specific time frame as determined by the FTA. Furthermore, the VAT registrant will also be liable to pay AED 2,000 as a penalty for the repetition of this offense within 2 years.
This is one of the most frequently asked questions concerning people who are filing a VAT return for the first time in Dubai, UAE.
There are three common mistakes people make while doing this.
If you make any of the above-mentioned mistakes, you can expect to be slapped with the following penalties.
Yes, there are a number of VAT Consultants in Dubai that you can reach out to.
Most people are advised to seek out VAT consultants if they are filing a VAT return for the first time. VAT Consultants offer great help to laypersons who have no prior experience in filing VAT returns. Such consultancy services consist of a qualified tax team that ensures you clearly understand this process at every step.
For a hassle-free VAT return filing experience, you can ask for help from World Company Setup. Our guidance will make the process simpler. We are a reliable audit and consultancy firm based in Dubai, UAE, with high-quality VAT consultancy services.
Our main objective is to provide our startups and businesses with effective VAT return filing assistance, compliance, support, and other related services. Whether it is about maintaining your firm's accounting records or filing a VAT return, World Company Setup is the go-to financial advisory service that is here to help you whenever you need it.
The services we offer include:
We have a team of expert consultants, accountants, and tax agents in the VAT rules and regulations of the UAE and its tax laws. Our expertise helps businesses manage the impact of TAX and VAT issues on their ongoing business deals.
A Q&A guide to establishing a business in the United Arab Emirates.
This Q&A provides an overview of the key issues related to establishing a business in the United Arab Emirates, including an introduction to the legal system; the available business vehicles and their applicable formalities; corporate governance structures and requirements; foreign investment incentives and restrictions; currency regulations; and tax and employment issues.
The legal system of Dubai, UAE is founded on civil law principles in conjunction with Islamic Sharia law. Sharia law influences criminal and civil law but does not fully cover commercial laws. The legal system includes both Sharia courts and civil courts; these govern different areas of law. However, the financial free zones in Dubai, UAE, namely the Dubai International Financial Centre (DIFC) and the Abu Dhabi Global Market (ADGM), practice a common law system and have their own independent courts where cases are heard in English.
Dubai, UAE, is a federation of seven emirates: Dubai, Abu Dhabi, Ajman, Fujairah, Ras Al Khaimah, Sharjah, and Umm Al Quwain.
The Constitution of Dubai, UAE, grants specific powers to the federal government, while allowing each emirate to have its own jurisdiction and control over its internal security and its oil and mineral wealth.
Dubai, UAE, is divided into mainland and free zones. Each emirate has:
Companies established in any free zone in Dubai, UAE, can be 100% foreign-owned, compared to the Dubai, UAE mainland where certain foreign ownership restrictions may apply in limited situations (see Question 20). Additionally, Emiratisation requirements do not necessarily apply in the free zones.
Description. A sole proprietorship is a simple method of business where an individual trades on their own account through a trade license issued in their own name. This form of business is referred to as an "establishment" rather than a company.
Citizens of Dubai, UAE and citizens of the Gulf Cooperation Council (GCC) countries (subject to certain conditions) typically form sole proprietorships in Dubai.
Foreign nationals can also establish sole proprietorships, but the foreign sole proprietor must appoint a local service agent (an independent representative who is a citizen of Dubai, UAE, or a company 100% owned by citizens of Dubai, UAE, who has no legal interest or liability in the business, but can act as its representative in Dubai, UAE).
Advantages and disadvantages. The advantage of this form is the low costs and formalities. The disadvantage is that the establishment does not have a separate legal personality from its owner, and therefore the sole owner is personally liable for the liabilities of the business to the extent of all their assets.
Description. A general partnership is an arrangement between two or more partners, where each partner is jointly and severally liable for the liabilities of the partnership without limitation.
Advantages and disadvantages. The partners must be natural persons and are jointly and severally liable for the debts of the company to the extent of all their personal assets. There is no real advantage to this type of legal form, and it is therefore rarely used.
Description. Federal Law No. 32 of 2021 on Commercial Companies (CCL) defines a limited partnership as a company consisting of both:
Advantages and disadvantages. The general partners are jointly and severally liable for the debts of the company and act as merchants. There is no real advantage to this type of legal form, and it is rarely used.
Description. A civil partnership is a partnership used to carry out professional activities. It requires at least two individual partners with unlimited liability. A legal person can be a partner provided it carries out an activity or activities similar to that of the civil partnership.
A civil partnership must be linked with a local service agent. Civil partnerships are subject to Federal Law No. 5 of 1985 (the Civil Code), not the CCL.
Advantages and disadvantages. While this entity can carry out professional activities, LLCs are mostly used for commercial activities. The disadvantages of this entity are:
Description. LLCs are governed by the CCL. LLCs are generally the most suitable method for foreign investors to establish a business in Dubai, UAE. Their form is similar to the private limited company in the UK.
An LLC must have between two and 50 shareholders (Article 71, CCL). Each shareholder is liable only to the extent of their share in the capital.
An LLC can also be established by a single (natural or legal person) shareholder, in which case the suffix "One Person Company LLC" must be added to the name. There is no specific situation or criterion for a single natural or legal person to own an LLC.
Advantages and disadvantages. One of the advantages is that LLCs are now permitted to have 100% foreign ownership for most of their commercial activities on the mainland, and for all LLCs in the free zones. No minimum capital is required, and the liability of the shareholders is limited to their share in the capital. The disadvantages are:
Description. PJSCs are governed by the CCL, which defines a PJSC as a company whose capital is divided into equal-value negotiable shares. A PJSC is very similar to a public limited company in the UK. Under the CCL, the shareholders of a PJSC are liable only to the value of their shares in the company.
A PJSC has a minimum capital requirement of AED 30 million. The provision for a nominal value per share has been removed under the new CCL.
Advantages and disadvantages. PJSCs have become very popular in Dubai, UAE, as they allow businesses to raise significant amounts of capital for large-scale projects. Also, a PJSC is permitted to conduct banking and insurance, whereas other corporate vehicles are not.
However, a PJSC is a complex structure and involves many formalities, as well as regulation and compliance by the Securities and Commodities Authority (SCA).
Description. A private joint stock company is essentially the same as a PJSC (see above), with the following differences:
Advantages and disadvantages. Private joint stock companies are more popular among foreign investors than PJSCs. However, they require extensive corporate and regulatory approvals, including pre-approval from the MOE regarding the articles of association.
The procedures for establishing a private joint stock company are similar to those for a PJSC.
Description. A branch is legally an extension of the parent company and does not have a separate legal identity. Therefore, the name of a branch must be the same as that of the parent company.
A branch in Dubai, UAE can only engage in activities similar to those of its parent company, and its activities must be licensed by the respective DED or free zone authority.
Branches (except those in free zones) cannot import, export, manufacture, and distribute products belonging to the parent company.
A branch established on the Dubai, UAE mainland must be registered with the MOE, which requires the submission of:
Any liability of the branch belongs to the parent company.
Advantages and disadvantages. One of the reasons for opening a branch in Dubai, UAE is so that the foreign company can conduct its activities from Dubai, UAE, and have a global presence. Also, the branch can act as a representative/marketing office of the parent company.
The branch is 100% owned by the parent company and does not have a separate legal personality, and therefore the activities of the branch can be consolidated with the financial statements of the parent company.
From a practical perspective, local companies can also establish branches within Dubai, UAE to conduct their operations from different locations; for example, stores or restaurants with multiple branches. From a Dubai, UAE law perspective, there is no tax advantage to opening a branch, as neither the LLC nor the branch is liable to pay tax.
The most common way for a foreign company to have a presence in Dubai, UAE is to incorporate an LLC or open a branch.
Under the CCL, a mainland LLC can be 100% foreign-owned, subject to the approval of its proposed activities by the authorities. No restrictions apply to 100% foreign-owned LLCs in the free zones.
A foreign entity can open a branch in Dubai, UAE to carry out:
A branch is not required to have its own memorandum and articles of association, as those of the parent company apply.
An overseas company can trade directly in Dubai, UAE through a commercial agent or a company registered in Dubai, UAE.
Licensing and other legal/regulatory requirements.
Advantages/Disadvantages. A branch cannot be used by a foreign company to carry out trading and distribution activities on the Dubai, UAE mainland; therefore, this option is only suitable for a foreign company that wants to trade through a branch in a free zone (see Question 2 and Question 3).
Description. The overseas company can enter into a distribution or commercial agency agreement with an existing commercial agent that is licensed to import and distribute products in Dubai, UAE.
Overseas manufacturers or traders who want to regularly import large quantities of goods into Dubai can do so through a commercial agency agreement. They can use a registered or unregistered agent (see below, Advantages/disadvantages).
Licensing and other legal/regulatory requirements. At the federal level, only a Dubai, UAE national or a company wholly owned by Dubai, UAE nationals can be a commercial agent (UAE Agency Law No. 18 of 1981). Therefore, any chosen agent must meet the criteria specified under this law and be licensed to import and/or distribute products in Dubai, UAE. However, it is not mandatory for most products to be distributed through a registered agent. Parties can enter into distribution agreements that are not registered with the MOE. Therefore, a company that is wholly owned by foreigners can still act as an unregistered agent or distributor, without the need to register the agency or distributorship agreement with the MOE.
Advantages and disadvantages. An advantage for registered commercial agents is that the agency agreement registered with the MOE cannot be terminated without the mutual consent of both/all parties, or if there is a justified reason for termination.
However, the nationality restrictions on agents (see above) are a disadvantage because only Dubai, UAE nationals can conduct a registered commercial agency business.
Applicable legislation/regulation. CCL.
Partnership agreements. A partnership agreement is required.
Liability of partners. The liability of the partners is unlimited.
Assets. Assets are held in the name of the partnership.
Legal personality. The partnership has a separate legal personality, but the partners are personally liable for the debts of the partnership.
Taxation. There is no tax on partnerships.
Applicable legislation/regulation. CCL.
Partnership agreements. There is no partnership agreement; the provisions of the articles of association and memorandum of association apply to the limited company.
Liability of partners. The active partners, who act as merchants, are jointly and severally liable for the debts of the company. The silent partners are not liable for the liabilities of the company beyond their share in the capital.
Assets. Assets are held in the name of the partnership company.
Legal personality. The limited partnership has a separate legal personality.
Taxation. There is no tax on limited partnerships.
Establish. A civil partnership must work with a local service agent. Applicable legislation/regulation. Civil Code.
Liability of partners. The liability of the partners is unlimited.
Taxation. There is no taxation on civil partnerships.
Joint ventures (JVs) are common in Dubai, UAE, not only between domestic companies but also between foreign companies and local businesses, as there are large amounts of inward investment and foreign ownership is restricted in certain sectors (see Question 19). Foreign companies are used by local companies to benefit from local knowledge and expertise in the local market.
Two persons or entities can establish a new entity to become the special joint venture company that carries on the business of the joint venture.
Legal entities and/or individuals can also enter into contractual joint venture agreements for specific projects that do not result in the establishment of a company.
A JV contract or agreement governs the obligations and respective powers of each of the JV partners, including all rights and responsibilities, liabilities, management structure, formation requirements, and the distribution of profits and losses.
Federal Decree-Law No. 19 of 2020 on Trusts is the trust law for the Dubai, UAE mainland. A trust can be a charitable trust (for humanitarian purposes) or a private trust (for the investment and use of the property). A trust can:
The DIFC has its own trust law (DIFC Law No. 11 of 2005).
Mainland LLCs are governed by the CCL.
The licensing authority for the registration of a mainland LLC is the DED.
For LLCs established in a free zone, the regulator is the free zone authority of that free zone.
Depending on the activity of the company, there may be additional regulatory approvals required to establish an LLC.
There is no concept of a shelf company in Dubai, UAE.
The process is as follows:
The main constitutional documents of an LLC are its trade license, memorandum, and articles of association. These documents are generally not available to the public, and the information available on websites is limited. In certain free zones, the model articles are publicly available and can be amended to the requirements of the LLC.
The constitutional documents of a mainland company are usually drafted in a bilingual format, that is, Arabic and English, signed before a notary public in Dubai, and duly notarized.
The constitutional documents of free zone entities can be in English and are signed before the relevant free zone authority.
The memorandum of association of an LLC must include:
The memorandum of association must be signed by the shareholders before a Notary or the DED and submitted to the DED.
In addition to the constitutional documents, separate shareholder agreements can be used to outline the rights and responsibilities of the shareholders, especially if a local shareholder is appointed as a nominee by a foreign shareholder to incorporate a local legal entity for carrying out activities that are not permitted by legal entities with 100% foreign ownership (see Question 20).
The accounts of Mainland LLCs must be audited by a locally registered auditor. The law requires LLCs to submit their audited statements to the relevant DED, but in practice, there is currently no mechanism to do so.
For free zone entities, the financial statements are submitted to the free zone authority. This is mandatory in most free zones, where fines will be imposed for non-compliance.
The accounts of private joint stock companies and PJSCs must also be audited by a locally registered auditor. A PJSC must publicly disclose its financial statements quarterly and annually.
The annual financial statements must be prepared in accordance with international financial reporting standards (IFRS).
A branch is an extension of the parent company and is therefore consolidated and forms part of the accounts and reporting obligations of the parent company. The accounts of a branch of a foreign company must be audited by a locally registered auditor, and the audited statements must be submitted to the MOE.
A local service agent (see Question 2) is not required to have audited statements.
The requirements are as follows:
A commercial contract or deed in Dubai does not require notarization.
Contracts can be signed by a company's director, general manager, or authorized representative. Electronic signatures are valid and recognized in Dubai, UAE under Federal Decree-Law No. 46 of 2021.
An LLC can have between 2 and 50 members.
Single-person LLCs can be established by a single natural or legal person (see Question 2).
There is no minimum capital requirement prescribed under the CCL, but most LLCs on the mainland in Dubai have been established with a capital of AED 300,000.
For free zones, the minimum capital requirements vary.
Article 80 of the CCL gives the existing shareholders of an LLC a right of pre-emption in the case of a transfer of shares to a third person.
Companies registered in free zones are also given a right of pre-emption under the respective free zone laws.
The shareholder who wants to transfer their shares must notify the other shareholders of the identity of the transferee and the terms of the transfer, after which the existing shareholders can choose whether or not to exercise their pre-emption rights and buy back the shares at the agreed price.
The procedure and mechanism for the transfer of shares are usually described in the company's articles of association. The transfer of shares must be made under an official document duly attested in accordance with the provisions of the CCL.
There are no other restrictions on the transfer of shares]
Minority shareholders have the right to receive the company's annual audited accounts and to inspect the company's books and records (Articles 27 and 100 CCL).
Additional protections can be granted to minority shareholders by entering into a shareholders' agreement containing provisions that provide additional benefits and protection to minority shareholders.
The liability of the shareholders of an LLC is limited to the capital contributed by the shareholder.
The statutory restrictions on quorum and voting requirements at shareholders' meetings include the following:
(Article 96, CCL)
Certain corporate actions require a special resolution (that is, the approval of the owners of 75% of the company's shares), including the following:
(Articles 108, 101, 154, 202, 276, 277, 285, CCL).
In practice, the relevant local authority may require 100% shareholder approval at a general meeting for some of the above actions.
On the Dubai, UAE mainland, all shares have equal rights. The shareholders can stipulate in the articles of association that certain decisions require the approval of 100% of the shareholders instead of 75%, for example.
However, in the free zones, different classes of shares have recently started to be used.
If there are different classes of shares, decisions can be taken by exceeding the voting majorities required by law, without the approval of the other class of shareholders.
Some commercial activities are subject to regulatory approval. Approval cannot be granted for strategic activities reserved for Dubai, UAE nationals, such as public transport, trading or manufacturing of military equipment, and activities related to water and electricity. Additional approvals/permits are required in the following sectors in Dubai, UAE, for example:
There are certain industry sectors reserved for Dubai, UAE nationals (see Question 20).
Businesses undertaking "strategic activities" require majority Dubai, UAE national shareholders or must be wholly owned by Dubai, UAE nationals. Strategic activities include:
There are no restrictions on foreign shareholders of LLCs in Dubai engaging in activities related to trade, contracting, manufacturing, investment, assembly, transport, and logistics.
There are currently no foreign exchange controls or currency regulations in Dubai.
The Federal Decree-Law No. 20 of 2018 on Anti-Money Laundering and Combating the Financing of Terrorism, as amended by Federal Decree-Law No. 26 of 2021, was enacted to ensure that the laws of Dubai, UAE are compliant with international standards on anti-money laundering and combating.
Economic Substance Regulations. Dubai, UAE recently issued the Economic Substance Regulations (Cabinet of Ministers Resolution No. (31) of 2019 as amended by Cabinet of Ministers Resolution No. (57) of 2020) (ESR). These require all mainland and free zone entities in Dubai, UAE to:
If the business carries on a relevant activity, it must submit a report containing details of the activity, its income, expenses, and assets, and declare whether the economic substance test has been met. The report must be submitted within 12 months from the end of each financial year.
"Relevant activities" include:
Ultimate Beneficial Owners Law. Any entity established on the mainland or in a free zone of Dubai, UAE must disclose the details of its ultimate beneficial owners (that is, the persons who, through a chain of ownership, hold 25% or more of the capital/voting rights of the entity) at the time of the company's registration and again at the time of renewal of its trade license (Cabinet of Ministers Resolution No. 58 of 2020 on the Regulation of Procedures of the Real Beneficiary) (UBO Law).
The UBO Law was issued in August 2020 by the Ministry of Cabinet Affairs of Dubai, UAE, in line with international disclosure requirements and to shift Dubai, UAE towards greater transparency.
In Dubai, there are certain designated areas, referred to as "freehold areas," where non-Dubai, UAE nationals can own 100% of the real estate. No such guarantee or security is required unless the property is purchased with a mortgage loan.]
In non-freehold areas, real estate is reserved for the ownership of Dubai, UAE/GCC nationals. This applies to all Emirates.
The following requirements apply to the directors of LLCs in Dubai, UAE:
It is generally good practice for a foreign director of an LLC to be sponsored by the company for their visa. This means that the general manager should be on the residence visa of the company that employs them. Although this is not legally required, it is required from a practical perspective, as banks in Dubai, UAE require the general manager to be resident to carry out banking transactions on behalf of the LLC, but the CCL does not explicitly require this.
There are no nationality restrictions or gender-based requirements for directors.
In addition, the specific requirements for PJSCs are:
Other general requirements for directors are as follows:
Other than a private joint stock company and a PJSC, there is no requirement to appoint a board of directors in an LLC, and the management can be vested in a single manager.
The general manager of a PJSC can be elected by the board of directors and should not be the CEO or general manager of another company.
A PJSC must appoint a secretary for its board of directors. The secretary must not be a director.
No person can be appointed or elected as a director of the company until they have declared in writing that they accept the nomination.
LLCs. The management of the company is vested in one or more managers as determined by the company's memorandum of association.
PJSCs. The number of directors must be an odd number between three and 11.
Employees have no statutory right to be represented on the board of directors.
The minimum number of members to incorporate a PJSC is five. However, this will not apply if a company is converted to a PJSC. Also, there is no limitation on the maximum number of members of a PJSC.
Under the CCL, there are no restrictions on a single-person LLC being re-registered as a public company, provided that its legal personality is preserved and it meets the requirements under the CCL and the requirements of the Securities and Commodities Authority regarding the conversion.
The minimum capital requirement for public companies is:
A public company that offers its shares to the public in return for a subscription must comply with:
Income tax. There is no corporate tax in Dubai, UAE, except for oil companies and foreign banks.
VAT. Value Added Tax (VAT) is collected from businesses with a tax registration at a rate of 5% on the supply of taxable goods or services at each step of the supply chain. VAT-registered businesses collect the amount on behalf of the government, and consumers bear the VAT in the form of a 5% increase in the cost of the taxable goods and services they purchase in Dubai, UAE.
A business must register for VAT with the Federal Tax Authority (FTA) if its taxable supplies and imports exceed the mandatory registration threshold of AED 375,000.
A business can also choose to register for VAT voluntarily when the total value of its taxable supplies and imports (or its taxable expenses) exceeds the voluntary registration threshold of AED 187,500.
Excise Tax. This indirect tax is applied to specific goods that are generally harmful to human health or the environment at the following rates:
There is no concept of a tax residency in Dubai, UAE. However, companies can obtain a tax residence certificate from the Ministry of Finance for use in other jurisdictions under a double taxation agreement, provided that the applicant submits certain information, including constitutional documents, a power of attorney, along with the last six documents.
The UAE is introducing a corporate tax regime to be applied to companies in Dubai, UAE from June 2023.
No tax is levied on dividends or profits remitted abroad in Dubai, UAE.
Not applicable.
As there is currently no applicable income or corporate tax, no tax incentives are available for companies in Dubai, UAE. Some free zones offer tax exemptions for up to 50 years, but once corporate tax is implemented in Dubai, UAE, certain incentives may be offered under the corporate tax regime.
Federal Decree-Law No. 33 of 2021 on the Regulation of Labour Relations (the Labour Law) governs employment relationships in Dubai, UAE. This law applies to employees (Dubai, UAE nationals or foreign nationals) who work in an entity in Dubai, UAE.
The financial free zones in Dubai, UAE have their own employment laws.
Other than the financial free zones, all Dubai, UAE entities are subject to the Labour Law.
To be able to work in Dubai, UAE, foreign nationals must:
Free zone employees are issued work permits by the free zone authority. Residence visas are issued by the immigration office in coordination with the free zone administration.
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