UAE VAT Registration: 0% vs out of scope

Jomtien · Feb 19, 2025

Hi!

I am in the process of registering for VAT in the UAE for my free zone company.

I understand that all sales outside of the UAE are 0% rated (source).
On the "Turnover Declaration Letter" required for registration, I entered all sales in the "Sales Subject to the Zero Rate Tax (0%)" column.

However, my service provider is advising me to list everything under "Sales Out of Scope of Tax" because they want to apply for an exemption for my business.

I don't think this is entirely correct, but perhaps it's acceptable here.

Has anyone applied for an exemption this way, or would it be better to proceed with regular registration?

Thanks!

kislokan · Feb 19, 2025

I was told by DLS that if all sales are outside the UAE then VAT registration isn't necessary and they want to de-register me as my previous accountant told me to register. stupi#21

JackAlabama · Feb 19, 2025

kislokan said:
I was told by DLS that if all sales are outside the UAE then VAT registration isn't necessary and they want to de-register me as my previous accountant told me to register.

is DLS back in business?
afaik true, if no vat is due bc all sales are from outside uae, you can leave the registration be.

kislokan · Feb 19, 2025

JackAlabama said:
is DLS back in business?
afaik true, if no vat is due bc all sales are from outside uae, you can leave the registration be.

Yeah I got an email from IFZA telling me to do all renewals via DLS as they are back in business. I have been talking to Dina who has been very responsive so far.

Seems like the accountant I went to after DLS closed has been taking me for a long ride. stupi#21

JackAlabama · Feb 20, 2025

kislokan said:
Yeah I got an email from IFZA telling me to do all renewals via DLS as they are back in business. I have been talking to Dina who has been very responsive so far.

thats good to know.

kislokan said:
Seems like the accountant I went to after DLS closed has been taking me for a long ride.

well, thats business as usual. Oftentimes they sell you services you dont need or they arent really sure themselves.

JustAnotherNomad · Feb 20, 2025

I think you can apply for the exemption if all your sales are to customers outside the UAE (so no UAE VAT is due ever).
If you don't get the exemption, then you have to register and submit VAT returns, even if they are 0.
But I have never dealt with this myself, this is just to the best of my knowledge. So please take it with a grain of salt.

Jomtien · Feb 20, 2025

I applied for the exemption without lying on the declaration (sales as 0% rated). I'll tell here when I get the answer.

Uniquelyunique · Wednesday at 13:07

But wouldn’t being vat registered be useful?
You would have 0% on sales
But would be able to claim 5% on expenses assuming you have some

JustAnotherNomad · Wednesday at 16:54

Uniquelyunique said:
But wouldn’t being vat registered be useful?
You would have 0% on sales
But would be able to claim 5% on expenses assuming you have some

If you have local expenses, yes. Most service-based businesses without local customers also won't have a lot of local expenses, and VAT comes with additional work and costs (accounting, declarations).
So you'd need quite a bit of local expenses for the VAT stuff to be worth it.

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