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What you need to know now
The 2017 DMCC notice predates VAT implementation. A DMCC licence does not itself exempt a business from VAT registration or compliance.
The original article is preserved below as a historical record. Earlier deadlines, rates, offers and approval statements should not be used as current guidance.
- The 2017 registrationdeadlines are historical.
- Assess the actual taxable supplies and imports.
- Keep the VAT analysis separate from Corporate Tax free-zone rules.
Use the old DMCC notice as launch history
The original notice was published before VAT implementation and referred to registration deadlines during the 2017 rollout. Those dates and the statement that Executive Regulations were still awaited are historical. They do not establish the process or deadline for a DMCC company operating today.
A DMCC licence is not a blanket exemption from VAT. Begin with the entity’s activities, supplies and imports and assess the current registration provisions. Preserve the original notice as background, but do not use its early-stage uncertainty as a reason to postpone a present registration or reporting assessment.
Map the company’s actual transaction streams
List the DMCC company’s local sales, exports, imports and services separately. Identify where goods are held and delivered, who contracts with the customer and which entity appears on the relevant documents. Businesses sharing an office or management team can still have distinct transactions and tax obligations.
For a trading company, the commercial file should connect orders, invoices, logistics and payment records. A service company needs an equally clear description of what it provides and to whom. Do not select the VAT code solely from the free-zone address on the invoice or from a related company’s previous practice.
Separate VAT questions from Corporate Tax status
Free-zone treatment under Corporate Tax is a separate analysis from VAT registration and transaction treatment. A statement about qualifying income or a particular Corporate Tax rate should not be copied into a VAT policy. Keep the technical conclusions and evidence for each regime identifiable.
Similarly, check any relevant Designated Zone rules using the precise area and transaction rather than assuming every free-zone company has the same position. Where goods pass through another zone or warehouse, record the actual movement. The place where the company is licensed is only one part of the commercial facts.
Set up recurring VAT controls after registration
Maintain the registration certificate, effective date and account responsibilities with the company records. Configure invoices correctly and establish the routine for collecting purchase evidence, reconciling imports and preparing return workpapers. Staff changes should not leave one person as the only source of the company’s filing history.
Review new transactions before they become recurring. A move into local distribution, a new service agreement or a changed customer location may need a different analysis from the original business model. An accessible transaction matrix and issue register help the DMCC company maintain its VAT position beyond the initial registration exercise.
YOUR NEXT STEPS
A practical way forward
- 01
Step 1
Identify the contracting entity and supply streams.
- 02
Step 2
Calculate the applicable registration measures.
- 03
Step 3
Maintain invoices, reconciliations and returns after registration.
CLEAR ANSWERS
Frequently asked questions
Do old DMCC registration cutoffs apply today?
No. They relate to the original VAT launch.
Does a DMCC licence mean no VAT?
No. Assess the business and transactions under the VAT rules.
Read the original article First published 7 November 2017 · retained for context
This earlier article is preserved for context. Its rates, deadlines, approvals and announcements may have been superseded. Use the current guidance and official references on this page for your next step.
VAT Registration for DMCC Companies – Notification from DMCC
The VAT Executive Regulations have not been released in public domain and the complete clarity on the treatment of Free Zones is still awaited.
However, based on the available information, we understand that all entities having a taxable supply exceeding AED 375,000 would be required to register for VAT and those with taxable supply between AED 187,500 and AED 375,000 may opt to register for VAT.
Further, the Ministry of Finance has issued the following deadlines for registration:
Before 31 October 2017 – Businesses with a turnover exceeding AED 150m should apply for registration
Before 30 November 2017 – Businesses with a turnover exceeding AED 10m should apply for registration
Before 04 December 2017 – All other business entities should submit their application to minimize the risk of not being registered in time for VAT go-live
We will share further information as soon as it is announced by the Federal Tax Authority (FTA). Nevertheless, you will need to be registered in order to claim back any VAT you pay as a business.
DMCC will share further information as soon as it is announced by the FTA. Nevertheless, you will need to be registered in order to claim back any VAT you pay as a business.
DMCC advice to start the registration as soon as possible. Businesses can register here through the e-Services portal on the FTA website. Find the registration steps here.
Please note that this is intended as a helpful guide and you may wish to seek advice on your specific circumstances from your tax advisor.
Find out more about the introduction of VAT in UAE on the DMCC website.
VAT for DMCC
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VERIFY THE DETAIL
Official sources & further reading
Source checks support this general guide. Your treatment depends on the facts, tax period and applicable legislation.
