The VAT registration threshold UAE rules decide whether your business must charge VAT. This guide explains the two thresholds, how to calculate your turnover and what happens if you register late.
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What is the VAT registration threshold UAE businesses must follow?
VAT in the UAE is 5% on most goods and services. A business must register with the Federal Tax Authority (FTA) once its taxable supplies and imports pass a set limit.
- Mandatory registration: taxable supplies and imports above AED 375,000 over the previous 12 months, or expected to exceed it in the next 30 days.
- Voluntary registration: taxable supplies or taxable expenses above AED 187,500 over the previous 12 months, or expected to exceed it in the next 30 days.
How to calculate your turnover for VAT
Add up the value of your taxable supplies (standard-rated and zero-rated) and imports. Exempt supplies and supplies outside the UAE are treated differently, so review your income by category before you decide.
Mandatory vs voluntary VAT registration
Mandatory registration is a legal duty. Voluntary registration lets smaller businesses recover VAT on their costs and look more established to customers. The trade-off is that you must charge VAT, keep tax invoices and file returns on time.
What happens if you register late?
You must apply within 30 days of crossing the mandatory threshold. The FTA can charge an administrative penalty of AED 10,000 for late registration. Check your turnover every month so you are never caught out.
VAT registration threshold UAE: key points to remember
The VAT registration threshold UAE rules come down to a few numbers and dates. Keep them in front of you when you plan your growth.
- Mandatory registration starts above AED 375,000 of taxable supplies and imports.
- Voluntary registration is possible from AED 187,500 of taxable supplies or expenses.
- You have 30 days to apply once you cross the mandatory threshold.
- Late registration can lead to an AED 10,000 penalty.
Examples of the VAT registration threshold UAE in practice
Trading company. A trading company invoices AED 40,000 a month. Over 12 months that is AED 480,000, which is above AED 375,000, so registration is mandatory.
Start-up with high costs. A start-up sells AED 150,000 a year but spends AED 200,000 on taxable purchases. Its supplies are below the mandatory threshold, but its expenses exceed AED 187,500, so it can register voluntarily and recover input VAT.
Growing consultancy. A consultancy expects a large contract worth AED 300,000 next month on top of AED 120,000 already invoiced. It is expected to exceed AED 375,000 in the next 30 days, so it should apply now.
How to register once you cross the VAT registration threshold
- Confirm your turnover with your accounting records.
- Gather your trade licence, passports, Emirates IDs and bank details.
- Create or log in to your EmaraTax account.
- Submit the VAT registration application with your turnover figures.
Our team can review your numbers and prepare the application for you. After approval, the FTA issues your Tax Registration Number (TRN).
Frequently asked questions
Do free zone companies need to register for VAT?
Yes, if they cross the threshold. The VAT treatment of some goods supplied inside designated zones differs, so check your activity first.
Can I register if I am below AED 375,000?
Yes, voluntary registration is possible from AED 187,500 of taxable supplies or expenses.
For official information see the Federal Tax Authority website. We also explain the VAT registration process step by step.
Need help?
Our tax consultants in Dubai can help with VAT registration. See our VAT registration service, or call or WhatsApp us on +971 56 860 3549 for a free consultation.
This article is general information, not tax advice. Rules and penalties change, so confirm the current position with the Federal Tax Authority or speak to us about your situation.