Improved Business Profile – starting out as a small business or new limited company it can be tough to compete against the big boys in places like Dubai, where everybody wants a piece of action. Most people are aware of the VAT registration threshold, so voluntarily registering your business for VAT might give the impression that your business is bigger and more successful than it is, and help you create a business image in minds of consumers and as well as the competitors.
Business Dealings – it is common in countries with VAT and other taxes, many suppliers and organizations are unwilling to do business with companies and SMEs that have not registered for VAT. A similar situation might also happen in UAE after implementation of VAT in UAE you might find that without the ability to produce a proper VAT invoice, most of your suppliers and business partners will be unwilling to deal with you. The advantage of voluntary VAT registration is you will be issued with a VAT registration number and can more easily deal with external businesses, and also you will have high mobility of assets with it, as other changes to policies might be expected by government to enforce the VAT registration.
Tax Refunds – another advantage of VAT registration to businesses going for voluntary registration is the ability to claim VAT on goods and services purchased for your business. If you are selling one sort of VAT Rated product (e.g. zero rated) while buying another (e.g. standard rated) you may receive money back from the taxing bodies in UAE.
As the manager of the business if you don’t keep a careful eye on your turnover then you might not notice when it creeps over the VAT registration threshold, which may result in hefty fines.
For startup businesses, if their income does not exceed the voluntary threshold of AED 187,500, but their expenses do, they can voluntarily register for VAT