Approved by Federal Tax Authority (FTA)
Mon - Fri: 8:30 am - 6:00 pm
Creative Tax & AccountingCreative Tax & AccountingCreative Tax & Accounting
Click to learn more!
Check Our Corporate Tax Calculator
Email: [email protected]
Creative Tax & AccountingCreative Tax & AccountingCreative Tax & Accounting

UAE VAT For Freelancers

The UAE has had VAT for four years, and businesses are settling in well to the VAT regime. Taking into consideration the size and expertise of the businesses, they understand the rules and have been able to adapt to the changes. There are, however, some challenges that freelancers and self-employed individuals face as they do not completely understand what they need to do. We explore how UAE VAT for freelancers can affect you and answer questions like How to file a VAT return for freelancers?

The UAE has made it much easier for freelancers to operate in recent years. The UAE has taken several steps to enable individuals to launch businesses, including introducing a range of license options that are meant to keep operating costs low. The freelance license is a great choice for many people who have expertise and who desire to be able to work freely and on a variety of projects or companies. 

Freelancers who operate a Freelance business license should be aware of several misconceptions regarding UAE VAT for freelancers legislation. 

Who Should Register? 

UAE legal requirement mandates that businesses exceeding the threshold of 375,000 UAE Dirhams for taxable supplies (sales + imports) made in the previous 12 months or the next 30 days must register within 30 days of exceeding the mandatory threshold.

In order to register voluntarily, the taxable supplies of the company must reach at least 187,500 AED, which is the VAT threshold for freelancers for voluntary registration. 

The vast majority of companies applying for UAE VAT registrations hold trade licenses. Therefore, independent contractors and freelancers are left wondering if they should register for VAT.

What Does This Mean For Freelancers?

The number of freelance licenses in the UAE is steadily growing, and so long as one is in possession of the relevant license before starting work, the UAE government encourages and allows freelance work. Freelancers and independent contractors should be fully aware of their obligations.

It is well known that Freelancers must register for VAT and follow the VAT rules if their operation generates an economic benefit for them (either monetary or in-kind). 

How To Register For VAT As Freelancer?

Businesses can now register for VAT online with the Federal Tax Authority (FTA) portal. The FTA has set business turnover deadlines and the registration process will take place in phases. For businesses, knowing how to apply for VAT registration as well as understanding the level of detail necessary to complete the registration process online is critical, as is determining their VAT registration obligation.

VAT Registration Advantages For Freelancers 

In today’s tough market conditions, credibility is necessary to gain an edge. One way to gain credibility is to register for VAT. A freelancer who is the owner of a VAT registered business creates a positive market impression in its territory by promoting their services. 

  • Entities may only register for VAT if their annual turnover reaches 375,000 AED or 187,500 AED. 
  • The disadvantage of using a freelancer is that there is no guarantee of a good relationship. This may make clients hire a VAT registered business instead. The ability to access larger clients as a freelancer with VAT Registration, along with the proper licensing set by the government, is a great advantage.
  • VAT registration as a Freelancer gives you the credibility of being reliable and sustainable, as you observe the law. 

Late VAT Registration

You will be subject to administrative penalties if you fail to register for VAT despite reaching the mandatory VAT threshold for freelancers. Late registration will incur a 10,000 AED charge.

Maintaining your transaction and financial records, registering for VAT, and complying with UAE VAT rules will help you avoid future issues with the Federal Tax Authority.

Would you like to know if you have the obligation to register for VAT as a freelancer? We have a team of experts at the creative zone who understand the numerous ways we can save money without getting into any legal action by FTA when it comes to VAT.

Leave A Comment