Over the past several years, the United Arab Emirates (UAE) tax environment has changed tremendously. Since the Value Added Tax (VAT) was implemented in 2018, companies doing business in the UAE must obtain a Tax Registration Number (TRN), which is a unique identity.
What is a Tax Registration Number (TRN)?
A Tax Registration Number (TRN) is a unique 15-digit code assigned to each taxable business in the UAE by the Federal Tax Authority (FTA). This number is a crucial identifier for various corporate entities, enabling the FTA to track and monitor taxable transactions efficiently. The TRN is also commonly called a VAT registration, or VAT identification number. Obtaining a TRN is mandatory for businesses under VAT registration, ensuring they comply with UAE tax laws and regulations.
What is tax registration number (TRN) verification?
The Federal Tax Authority (FTA) of the United Arab Emirates issues the TRN, a distinct 15-digit code. Businesses and individuals use this special code as an ID to monitor their taxes and verify a TRN. TRN is also known as a VAT identification number in certain parts of the world. A distinct TRN number is given to each company or person registered under UAE VAT. Only businesses registered under UAE VAT can charge VAT to their clients. Charging VAT if you are not a ‘registrant’ may put you in legal trouble.
Value-added Tax (VAT) is a relatively new idea for most UAE enterprises. VAT is simply a levy that businesses charge to their customers and then refund to the government. A 5 percent VAT was imposed in the UAE in 2018 to strengthen its economy and lessen its reliance on oil. VAT on business transactions is treated based on the forms of VAT supply. Registrants must charge 5 percent VAT to their clients on taxable supplies, which include taxable goods and services.
Importance of TRN verification
Here are some reasons why UAE-based firms should be aware of the TRN:
VAT compliance
All official documents, tax invoices, invoices, and communications pertaining to taxable transactions must have the VAT-registered firm’s TRN. Failure to furnish a valid TRN might result in penalties and fines levied by the FTA.
Tax recovery input
Only businesses with a valid TRN can claim input tax credits on purchases. By verifying the TRN of such providers, a company can ensure that it is working with reputable suppliers and that it can collect input tax in accordance with VAT legislation.
Business transparency and accountability
The TRN promotes honesty in commercial dealings and helps eliminate fraud and tax evasion. By verifying TRNs, companies can be certain they are working with reputable, law-abiding organizations.
Commercial image
In commercial negotiations, displaying a valid TRN contributes to credibility and trust development. Businesses with a valid TRN and VAT registration are likelier to have relations with clients and partners.
Benefits of TRN verification
TRN verification in Dubai, United Arab Emirates, offers several advantages that guarantee safe supply transactions. Here are some points:
- Reduce the unlawful VAT fees to a minimum
- Verify vendors for legitimate purchases
- Start securing tax bills
- Eliminates the use of fictitious tax identification numbers
- Protect the money coming into the government
- Check the status of your VAT
- Request an input tax credit
- Both registered and unregistered users can use the utility for free
Benefits of verifying TRN on invoices
Verifying a TRN on invoices is essential for businesses operating in the UAE. This practice ensures that the supplier is registered with a legitimate TRN, thereby preventing VAT fraud and revenue loss. By confirming the TRN on invoices, businesses can confidently claim input tax credits on their purchases, which helps reduce their overall tax liability. Additionally, verifying a TRN fosters transparency in business transactions, aiding in preventing tax evasion and fraud. This step protects the business and contributes to the integrity of the tax system.
TRN verification process
The official FTA portal provides a fully online process for verifying a TRN in the United Arab Emirates. The following is a step-by-step process for validating a TRN:
- Go to the FTA website portal: Visit the official website of the Federal Tax Authority: https://tax.gov.ae/en/default.aspx and click the ‘TRN’ Icon on the right-side panel.
- Go into the TRN: You will be asked to enter the 15-digit TRN you wish to verify. Ensure you enter the TRN accurately to prevent mistakes during the verification process.
- Submit the verification request: After entering the TRN, click ‘Verify’ or ‘Submit’ to start the verification process. The system will compare the TRN to the FTA database to verify its credibility.
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Advantages of hiring an agent for TRN verification
There are several benefits of hiring an agent for TRN verification. Below are some advantages:
- Have connections in the Federal Tax Authority (FTA): Reliable reports are readily available because tax managers and agents are in contact with agencies such as the FTA.
- Facilitating the VAT registration process: A tax expert may assist qualified firms in applying for VAT through an easy procedure.
- Help acquire a TRN: A business’s TRN is processed when it files for VAT. However, it could be delayed, so you can work with a tax manager to eliminate difficulties and acquire your TRN on time.
- Support in the verification of VAT and TRN: Tax administrators and agents can help throughout the TRN verification process. This procedure ensures that the organization pays VAT and that the company that charges it legally documents it.
- Help with TRN de-registering: Although this is a complex procedure, a tax manager can simplify it and speed up the results.
How fake tax registration numbers can be reported
Businesses must verify the authenticity of suppliers by examining the TRN before filing a VAT return. Any false TRN should be reported by a taxable person to the appropriate authorities via a VAT hotline. Every individual who resides and conducts business in the United Arab Emirates is accountable for this.
Common TRN verification mistakes
There are several common mistakes that businesses make when verifying a TRN. These include:
- Not verifying the TRN on invoices: Failing to verify the TRN on invoices can lead to VAT fraud and revenue loss.
- Not checking the TRN format: A UAE VAT TRN is a unique, 15-digit number with the first three digits being 100. An authentic TRN will have the following format: 100-xxxx-xxxx-xxxx.
- Not using the FTA’s TRN verification tool: The FTA provides a convenient TRN verification tool on their website that can be used to verify any TRN.
- Not reporting fake TRNs: If you encounter a fake TRN, it is crucial to report it to the authorities via the VAT helpline and/or email.
By avoiding these common mistakes, businesses can ensure that they are verifying TRNs correctly, thereby preventing VAT fraud and revenue loss.
Conclusion
TRN verification is an essential component of doing business in the United Arab Emirates, whether you are a consumer seeking confirmation on a company’s data or a business owner verifying the credentials of a possible partner or supplier. Appropriate counsel and a thorough grasp of VAT rules and regulations can help firms remain compliant and build confidence in their business partnerships. Remember that it is better to be cautious than sorry regarding TRN verification in Dubai.
Frequently Asked Questions (FAQs)
1. How does one register for TRN in the United Arab Emirates?
To obtain your Tax Registration Number (TRN) in the United Arab Emirates, visit the e-Services website, which FTA manages. In accordance with UAE VAT legislation, first create an e-service account and then complete the registration form.
2. How many digits are there in a TRN number?
The Federal Tax Authority of the United Arab Emirates issues the 15-digit TRN Number.
4. Do the VAT returns I submit to the FTA need to include the VAT registration number?
Yes, taxpayers are required by UAE VAT laws to include the TRN in their VAT filings.
5. What happens if I pay an invoice without confirming the TRN?
You might not be able to claim the Input Tax Credit (ITC), and the input tax you paid on the purchase could end up in the wrong hands. Therefore, it is always advised to do VAT verification.
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