Business setup in Dubai is an exciting perspective full of promise and opportunities. On the other hand, figuring out all of these legal and financial issues can be a bit intimidating for someone who is still trying to learn what is the difference between a company number and a tax registration number.
Two key identifiers among the many necessary are the Company Number and Value Added Tax Number (VAT). While both numbers are important for doing business in Dubai, they serve different purposes and are issued by different authorities. In this blog, we will shed light on company registration number vs VAT number. Let us get started:
What is a Company Registration Number (CRN)?
Like how we as individuals need a unique birth certificate number, similarly, a Company Registration Number (CRN) is the most basic means of business identity in Dubai.
The first thing you need to know about Company registration while setting up a business in Dubai is that each business will be assigned its own CRN. This can be done by registering your business, upon which the Department of Economic Development (DED) will issue a CRN.
If you run a small café or a large corporation, getting CRN is legally required as this number is necessary for lawful operation. Thus, with a registered company in official records businesses can very easily be identified for different stakeholders, such as Government agencies, banks, and suppliers among others with the help of CRN. After the successful submission of your documents and payment, you get a CRN.
Why is the CRN Important?
The reason why CRN is so significant is multiple:
- Legal Existence: Allows your business its legal recognition to be the stand-alone entity minus its owners.
- Conducting Business: The CRN must be provided to open a business bank account and sign contracts as well as for various licenses/permits which are used as approval conditions.
- Transparency: With a CRN, it ensures transparency & accountability in tax invoices which is much-needed for preventing fraud.
What is a VAT Number?
A new required identification was introduced on 1 Jan 2018 as part of a business registration process called VAT. It was named “VAT number” with the help of the company formation agent. Moreover, all compliant companies in the UAE are given by the tax authority. VAT (Value Added Tax) is a type of indirect tax that is levied on specific goods and services, which are overseen by the Federal Tax Authority.
This number identifies the business for tax purposes, so it is essential to acquire a valid VAT Number. However, it should be noted that not all companies are required to have a VAT number, only those whose taxable supplies amount exceeds AED 375,000 per year need to register.
The company Registration Number (CRN) is issued by the Department of Economic Development and the VAT number comes from the FTA. Businesses registered for VAT must include the VAT number on all invoices they issue to clients and file VAT returns with the FDA, ensuring accurate VAT collection and reporting.
Moreover, for companies house with a VAT registration number, it should be present in all invoices to apply correct tax declarations and be compliant with the law.
Why is the VAT Number Important?
The VAT number plays a critical role in business operations for several reasons:
- Tax Compliance: It helps businesses comply with VAT accounting, ensuring they collect and remit the appropriate amount of tax returns to the FTA.
- Input Tax Recovery: Businesses can recover VAT paid on their expenses, making the VAT number essential for financial management.
- Professionalism: Including a VAT number on invoices enhances your business’s credibility and professionalism in the eyes of customers and partners.
Company Registration Number vs VAT Number: Distinguish Between CRN and VAT Number
Although a company registration number vs VAT number is important for businesses in Dubai, they serve different purposes and have their unique features. The main differences are:
Purpose
Company registration number identifies your business as a legal entity. It is necessary to incorporate the company and comply with corporate law. However, the VAT number identifies your business for tax purposes and is used primarily for VAT collection and remittances.
Eligibility
All businesses in Dubai must have a CRN, regardless of revenue or business activities. Only companies whose taxable turnover exceeds AED 375,000 per annum are required to obtain a VAT number.
Empowerment
The company registration number is presented by the Department of Economic Development (DED) in Dubai. In addition, the VAT number is issued by the Federal Tax Authority (FTA) of the UAE.
Experimental Testing
CRN is used for regulatory recognition, business, and government transactions. On the other hand, the VAT number is used for tax compliance, payment, and import duty collection.
Certificate of Incorporation vs. Incorporation. Tax Records
CRN is obtained during processing. However, the VAT number correctly is obtained once a business meets the criteria for VAT requirements.
How to Obtain Each Number in Dubai?
To get the company name number, follow the given steps:
- Decide what type of entity you want to form or identify your company (e.g., sole proprietorship, limited company, or corporation).
- Gather the necessary documents, including the business plan, registration form, a copy of the owner’s passport, and the lease agreement.
- Submit your application along with the required fee and documentation to the Department of Economic Development.
- Once your application is approved, you will receive a unique taxpayer reference or company registration number.
To get a VAT number, follow the given requirements for VAT registration:
- Make sure your business meets the AED 375,000 turnover limit that requires VAT law registration.
- If you meet the requirements, you must register for VAT process through the Federal Tax Authority online portal.
- Submit your business information, including your income, activity, and banking information.
- Once approved, you will be issued a VAT number which you must use for all relevant transactions.
Final Thoughts
Company Registration and a VAT Number are mandatory in Dubai if you have a Business. The VAT number is used to comply with tax, develop/manage revenue, and, of course, a CRN that will give you legal identity and make your business recognized.
Anyone interested in opening a business or already running a commercial enterprise will need basic familiarity with these two designations. Effectively managing these registrations will set the foundation for your Dubai business to run correctly and grow within one of the most thriving global environments on earth.
As per your start of a business setup in Dubai, rely on legal and tax consulting to make sure you meet their regulations. Having the right information & professional backup you can sail through this complicated business registration and tax-paying process to get your venture on a new trajectory. We hope our detailed guide on a company registration number vs VAT number helped you gain clarity regarding the two vital official numbers in the UAE.
Frequently Asked Questions
1. Is the VAT number the same as the organization number?
No, a VAT number is for tax purposes, while an organization number identifies a business as a legal entity.
2. How do I find the VAT number of a company name?
You can find a company’s VAT number by checking official invoices or contacting the company directly. Some countries have online business registries to verify VAT numbers.
3. How do I find VAT on a number?
You can calculate VAT by multiplying the net price by the applicable VAT rate. For example, if the rate is 5%, multiply the price by 0.05 to find the VAT amount.
