How to get exception from UAE VAT Registration?

Exceptions from registration

If a person exceeds or anticipates exceeding, the Mandatory Registration Threshold, they may request to be excluded from the requirement to register if their taxable supplies are exclusively zero-rated. However, the FTA is not obliged to accept such requests and acceptance is at the FTA’s discretion.

If a request for an exception from registration is accepted, then the person must inform the FTA if they start making any supplies which are subject to VAT at the standard rate. A failure to do so could result in the FTA raising a tax assessment and imposing penalties.

How to Apply the Exception from VAT Registration

You still have to apply for VAT Registration, however, while filling the VAT Application Form, you will find a section, where it will be asked “if you wish to apply for an exception from VAT Registration, if it is so, then check “yes” there and submit the VAT registration form. Later it will depend on FTA whether your request is accepted or not.

Penalties for Failure to Register for VAT

If a person meets the Mandatory Registration Threshold and fails to register for VAT, or if they continue to make taxable supplies without registering for VAT, they may face penalties and fines from the FTA. The penalty for failing to register for VAT within the specified time frame is AED 20,000. Additionally, a penalty of AED 1,000 may be imposed for each month that the person continues to make taxable supplies without registering for VAT, up to a maximum of AED 12,000. Furthermore, the FTA may also conduct audits and impose additional penalties for non-compliance with VAT regulations. It is important for businesses to ensure that they are aware of their VAT registration obligations and comply with them in a timely manner to avoid facing penalties, fines, and audits from the FTA.