VAT Registration for Freelancers in the UAE

Do freelancers pay VAT in UAE? How to register VAT as a freelancer? The UAE legislation defined a minimum threshold for freelancers to register VAT. Check out the article to find out more!

Introduction


Dubai ranks as one of the best cities in the world to live and work for expats with its magnificent infrastructure, healthcare facilities, and network of communities. As a freelancer, you can experience luxury, comfort, and security, apart from the freedom to choose a work-life balance. 

Moreover, the UAE takes several steps to promote entrepreneurs by introducing a range of license options to keep operating costs low for freelancers. The UAE has made it easier for freelancers to launch, expand, and thrive in the global freelance community. 

In 2018, the government implemented VAT registration for businesses and freelancers, insisting freelancers keep accounts and financial records to comply with tax laws. Perhaps freelance professionals must register with the government and provide VAT invoices to clients with a TRN number. 

If you are a freelancer, entrepreneur, or looking to be one, you should know the UAE government regulations regarding VAT registration for your freelance business. Here is everything you need to know about VAT Registration for Freelancers in the UAE. 

VAT (Value Added Tax)

VAT or Value Added Tax is a tax levied on the consumption of goods and services at the point of sale. The government assigns businesses to collect VAT on its behalf. 

VAT registration is mandatory for freelancers if they meet specified norms per the Federal Tax Authority (FTA). 

Advantages of VAT Registration for Freelancers

1. It will give credibility to the competitive markets for your business. 

2. It is a mark of the stability of your freelancing business.

3. VAT registration minimizes the risks of penalties in the UAE.

4. Freelancing business with VAT registration help you establish authenticity with clients and grow your business.

So, as a freelancer, you should register for VAT on time. 

VAT registration for Freelancers

There are three categories of freelancers for VAT registration:

1. If your freelance business generates more than AED 375,000, you must register and pay VAT to the government.

2. A freelance business generating a revenue of at least AED 187,500 can voluntarily register.

3. A freelance business that generates an income of less than AED 187,500 cannot file VAT.

How to Register VAT as a Freelancer?

You can register for VAT on the Federal Tax Authority (FTA) website. To register for your TRN number, you must have a freelance license. 

Recently, FTA introduced a new platform, EmaraTax, to integrate all tax services under one roof. Apart from the mandatory license for conducting freelancing business in the UAE, freelancers must register for VAT if their annual income crosses the minimum threshold set by the government. 

Essential Documents for VAT Registration

1. Copies of passport

2. Emirates identity card.

3. Memorandum of Association

4. Bank Account Statements

5. Sponsor Agreement, if applicable.

6. Financial Reports of Projected Annual Income

7. Business License/Trade License

8. Previously Audited Financial Records of the Last 12 Months

After you submit all the requisite documents, you will get a Tax Registration Number (TRN).

What after VAT Registration?

Once you get your TRN number, make sure that you mention it on all your invoices, and you should number your invoices sequentially. You should disclose the total cost and VAT on the invoices separately. 

Conclusion

We at Freedom2Work will assist you in making your freelance dream a reality. We will keep bringing you all the latest updates from the freelancing world while you continue to grow your business. 

If you want to apply for a freelance visa and permit, check out our website. For more information, contact us at our toll-free number, 800-FREEDOM or info@freedom2work.com.

Open chat
1
Hello, how can I help you?