Commercial Activities Certificate for VAT in the UAE

The Commercial Activities Certificate is an important document issued by the Federal Tax Authority to registered businesses generating enough revenue. It confirms that the business is legally conducting commercial operations in the UAE. This allows the firm to claim credit for the VAT paid on supplies and services required to run the business. In this article, we will discuss the importance Commercial Activities Certificate for Value Added Tax (VAT) in the UAE.

Eligibility for a Commercial Activities Certificate

To qualify for a Commercial Activities Certificate, the business must meet the following requirements:

• Be registered or needed to register for VAT in the UAE. This involves crossing an annual revenue threshold.
• Generate over AED 375,000 per year from taxable goods and services sold. Once over this amount, 5% VAT must be charged on supplies.
• Conduct an ongoing commercial or economic activity in the UAE. This can involve:

1. Consistently producing goods
2. Trading goods and services on a regular basis
3. Regularly offering consultation services

Businesses operating in the nation must regularly engage in this activity. The requirements for a continuous commercial activity are unlikely to be met by one-time or infrequent transactions.

Procedure to obtain a Commercial Activities Certificate under VAT in the UAE

The procedure for obtaining a Commercial Activities Certificate is straightforward, and involves the following steps:

• Request Information

The first step involves choosing the valid VAT Tax Registration Number (TRN) linked to the business. Provide details like certificate start date, country for which it is required, and preferred language. Upload requesting a letter from the business and a valid trade license.

• Request Details 

Provide business details like legal name, trade name if different, business activities, and address. Upload documents proving business ownership and activities like commercial license, lease agreement, SAP charts, etc.

• Delivery Information

Confirm if the printed certificate is needed, the number of copies, and the delivery address. The default address will be the one in the user profile but an alternative can be chosen.

• Fee Payment

Proceed to the payment step and pay the initial submission fee. Once paid, the request gets registered and assigned to a Federal Tax Authority officer.

• Application Review 

Submission allows real-time tracking of application status via email/portal. The officer reviews and takes necessary actions to issue the certificate.

Table: Tax certificate fee

Required Documents To apply for a Commercial Activities Certificate

To apply for a Commercial Activities Certificate, businesses need to submit the following key documents:

• Requesting letter issued by the applicant for Commercial Activities Certificates
• Trade license
• VAT identification number: is a 15-digit code used to verify a registered business and its VAT obligations.

FTA verification: The agency will verify two important things:

1. Confirmation that revenue and activity match
2. VAT registration.
3. All documents including licenses are accurate.

It's important to supply all information completely. Incomplete forms can result in delays in receiving the certificate. Always refer to the FTA website to ensure supplying the exact papers they need, so as to ensure a smooth application process.

Refund of VAT Paid Outside the UAE

Holders of a valid Commercial Activities Certificate can claim a refund for the VAT paid outside the UAE. This includes VAT paid on:

• Imports of goods and services into the UAE
• Overseas business travels and events
• Procurement from foreign suppliers

To claim such refunds, businesses must submit refund applications to the FTA along with supporting documents like import documents and invoices. Refunds are processed per applicable Double Tax Avoidance Agreements (DTAA) provisions between the UAE and other countries.

Benefits of Commercial Activities Certificate

Obtaining a Commercial Activities Certificate brings several important benefits for businesses:

• Claim a refund for the VAT paid outside the UAE in advance for cross-border transactions where Double Tax Avoidance Agreements (DTAA) are not applicable.
• Avail the benefits of Double Tax Avoidance Agreements (DTAA)  like preventing double taxation on the supply of the same goods and services across countries.
• Establish the proof of being a taxable person under the UAE corporate tax regime for international transactions.
• Avoid unnecessary payment of VAT amounts in other countries where Double Tax Avoidance Agreements (DTAA) apply due to the certificate.

 FAQs (Commercial Activities Certificate)

What is the Commercial Activities Certificate fee?

The tax certificate fee is AED 5,00.

Can I use a Commercial Activities Certificate for corporate tax purposes?

Yes, you can use the Commercial Activities Certificate for corporate tax purposes to take advantage of Double Taxation Avoidance Agreements (DTAA) and to claim a refund for the VAT paid outside the UAE. However, it is not a substitute for a Corporate Tax Registration Certificate.

How can I get assistance with the application?

Farahat & Co can help you with application requirements and can help you in obtaining the Commercial Activities Certificate for VAT in the UAE.

Conclusion

In conclusion, obtaining a Commercial Activities Certificate helps the tax registrants benefit from Double Taxation Avoidance Agreements (DTAA) and helps to claim a refund for the VAT paid outside the UAE. However, expert assistance may be needed for businesses to obtain a Commercial Activities Certificate as it involves complying with the Federal Tax Authority (FTA) requirements. This is where the role of professional tax agents in Dubai becomes important. By leveraging the expertise of Farahat & Co., you can obtain your Commercial Activities Certificates smoothly and in a timely manner to ensure compliance with the Value Added Tax (VAT) law.