GCC-High levels of VAT compliance in UAE
On 1 January 2018, VAT was implemented in the GCC, initially in the UAE and Saudi Arabia. Under UAE legislation, UAE established businesses with taxable turnover exceeding AED375,000 in a 12 month period were obliged to obtain a UAE VAT registration and account for VAT on their supplies as applicable.
Information released by the UAE Federal Tax Authority this week has indicated that of those businesses obligated to register, 98.8% have done so. In total, around 275,000 businesses have so far obtained a VAT number.
However, it was indicated that whilst compliance levels amongst resident businesses was high, it is thought that many non-UAE established businesses who are obliged to register have so far failed to do so.
Businesses should note that no threshold exists for non-UAE established businesses and VAT registration is obligatory at the commencement of taxable supplies within the UAE (and also Saudi Arabia).