VAT requirement for Freelancer in Dubai (Clarification needed)

[troubled soul]

If some IT freelance who make more than $15k month outside of Dubai, No earning in Dubai.
If he liable to registration for vat.
Please help me to clarify.

I find official website it says "If you make more than AED 375,000 per year, you must register for VAT"

As example Good AdSense earning more than $15k per month . Should I pay VAT or not ?

Is it good idea to apply for this Freelance permit with high earning ? or Register free zone company?

Thanks

https://gofreelance.ae/faqs.html

4. Am I allowed to register for VAT?
If you are making between AED 187,500 per year and AED 375,000 per year then you may register for VAT if you choose to. If you make more than AED 375,000 per year, you must register for VAT. For more information, please visit Value Added Tax (VAT) - The Official Portal of the UAE Government
If you don’t register, it’s always a good idea to keep good accounts just in case the policy changes in the future.

 

[CaptK]

VAT is only applicable if your customers are in the GCC

 

[troubled soul]

VAT is only applicable if your customers are in the GCC

Thanks for reply.

VAT registration required ?
As mention in official website.

 

[CaptK]

Only if you hit the limit of local business, if your business is all from foreign sourced then you dont need to.

 

[rowena]

Only if you hit the limit of local business, if your business is all from foreign sourced then you dont need to.

This is not correct. You can check the attached official clarification regarding this.

You need to apply for VAT registration if your turnover over 375K AED. It doesn't matter foreign-sourced or GCC-sourced.

If your all income is foreign-sourced and applicable %0 VAT then you can apply for a VAT registration exception. You can see this option in the VAT registration application. I have several businesses with approved VAT registration exceptions.

 

[troubled soul]

This is not correct. You can check the attached official clarification regarding this.

You need to apply for VAT registration if your turnover over 375K AED. It doesn't matter foreign-sourced or GCC-sourced.

If your all income is foreign-sourced and applicable %0 VAT then you can apply for a VAT registration exception. You can see this option in the VAT registration application. I have several businesses with approved VAT registration exceptions.

So it is better to register offshore company compare to freelance visa vat registration confusion.

 

[rowena]

@azb1
Even offshore companies required to apply for VAT registration if their turnover more than 375K AED. Offshore company in UAE(like RAKICC) is trash for doing business. Extremely hard to open a bank account. They're better for other purposes like holding company.

VAT Registration or getting an exception for registration is actually easy. You just need to visit the FTA website and fill the online form. It is not going to take more than 15 min and FTA will confirm your application after they review.

 

[troubled soul]

@azb1
Even offshore companies required to apply for VAT registration if their turnover more than 375K AED. Offshore company in UAE(like RAKICC) is trash for doing business. Extremely hard to open a bank account. They're better for other purposes like holding company.

VAT Registration or getting an exception for registration is actually easy. You just need to visit the FTA website and fill the online form. It is not going to take more than 15 min and FTA will confirm your application after they review.

Thanks for your reply. Really appreciate. Again sorry for my ignorance . I have few more doubts .

0% VAT income , You have to declare (that) your income .
Am I getting right ?

And how to "approved VAT registration exceptions" ?

Can you give more detail about it ?

 

[BlueMist]

You can apply for VAT exception during the application process. I hope it has improved because mine was declined on the spot for no reasons. Anyway if you are doing non GCC 0% tax sale, doing this VAT submission every 3 months takes 5mins. You basically have to input 0 everywhere apart from one field. Also once you are VAT registered and your company have VAT expenses e.g. annual renewal trade licence fees of e.g. AED 21.000 with VAT, you can always reclaim this 5% (AED 1000) paid in VAT. If you are not VAT registered, you can't reclaim this.

 

[troubled soul]

You can apply for VAT exception during the application process. I hope it has improved because mine was declined on the spot for no reasons. Anyway if you are doing non GCC 0% tax sale, doing this VAT submission every 3 months takes 5mins. You basically have to input 0 everywhere apart from one field. Also once you are VAT registered and your company have VAT expenses e.g. annual renewal trade licence fees of e.g. AED 21.000 with VAT, you can always reclaim this 5% (AED 1000) paid in VAT. If you are not VAT registered, you can't reclaim this.

So I do not have to declare money earned outside of GCC.
Am I getting it right?

Sorry for my ignorance in advance.

 

[BlueMist]

So I do not have to declare money earned outside of GCC.
Am I getting it right?

Sorry for my ignorance in advance.

You have to declare it on VAT zero rated supplies field. There is one field for that on VAT reporting. I have accountants in Malta, Cyprus because obviously I wouldn't be able to do it myself. But here I just have few non GCC 0% rated sale invoices per year. I just sum up them every 3 months and input this number on VAT report. If I would be in a rush, it would take me max 60 seconds or less The cheapest accounting packages in UAE will be roughly between AED 6000 (usually only 4x VAT submissions) but neither of the professional company will offer your this service only without having bookkeeping as well. With bookkeeping it will cost at least AED 10.000-12.000. Then if I would have a proper accounting done, then I would like to have it audited which would probably cost another approx. AED 5000 etc. So just keep it simple and DIY for VAT reporting.

 

[emihunter]

This is not correct. You can check the attached official clarification regarding this.

You need to apply for VAT registration if your turnover over 375K AED. It doesn't matter foreign-sourced or GCC-sourced.

If your all income is foreign-sourced and applicable %0 VAT then you can apply for a VAT registration exception. You can see this option in the VAT registration application. I have several businesses with approved VAT registration exceptions.

hey Rowena can I please get in touch with you?

 

[emihunter]

You have to declare it on VAT zero rated supplies field. There is one field for that on VAT reporting. I have accountants in Malta, Cyprus because obviously I wouldn't be able to do it myself. But here I just have few non GCC 0% rated sale invoices per year. I just sum up them every 3 months and input this number on VAT report. If I would be in a rush, it would take me max 60 seconds or less The cheapest accounting packages in UAE will be roughly between AED 6000 (usually only 4x VAT submissions) but neither of the professional company will offer your this service only without having bookkeeping as well. With bookkeeping it will cost at least AED 10.000-12.000. Then if I would have a proper accounting done, then I would like to have it audited which would probably cost another approx. AED 5000 etc. So just keep it simple and DIY for VAT reporting.

the rules have changed and now you can apply for exception even though you're already vat registered. maybe its something you can look into? I'm stuck in a rut trying to figure out how much fines I'm going to incur with all of this as I'm really late to register

 

[zzzzzz]

I noticed there are freelancers who are self-sponsored (via freezone i.e. Gofreelance) and freelancers who have work permit from some mainland/freezone company and they sponsor them. Are the last one even considered freelancers or are they employees with NOC? Do they also need VAT number and pay tax if above 375k AED?

 

[emihunter]

I noticed there are freelancers who are self-sponsored (via freezone i.e. Gofreelance) and freelancers who have work permit from some mainland/freezone company and they sponsor them. Are the last one even considered freelancers or are they employees with NOC? Do they also need VAT number and pay tax if above 375k AED?

if you don't have an employment contract then its considered a sale so you have to register if revenue is above 375k. I'd speak to an accountant if I were you though. the technical answer may be to register but most don't in reality.