The UAE VAT registration threshold is AED 375,000 of taxable supplies and imports. Pass it, or expect to pass it, and registration is compulsory. Below that, you may register voluntarily from AED 187,500. The rules are simple to state and easy to get wrong in practice, because the test looks both backwards and forwards.
The two thresholds
| Threshold | Amount | Effect |
|---|---|---|
| Mandatory registration | AED 375,000 | You must register for VAT |
| Voluntary registration | AED 187,500 | You may register if you wish |
The mandatory threshold applies to the total value of your taxable supplies and imports. Zero-rated supplies, such as exports, count towards it. Exempt supplies and supplies outside the scope of VAT do not. The voluntary threshold can be met by taxable supplies, imports or taxable expenses, which is why a start-up with large set-up costs and little income can register early and recover the VAT it has paid.
The two mandatory tests
You are required to register if either of these is true:
- The look-back test. Your taxable supplies and imports in the previous 12 months exceeded AED 375,000.
- The look-forward test. You expect them to exceed AED 375,000 in the next 30 days.
The second test catches businesses that sign one large contract. If you sign a AED 400,000 agreement and the invoice falls due next month, you have met the test today, not when the money arrives. Review contracts as well as past turnover.
The 30-day deadline
Once either test is met you have 30 days to apply through EmaraTax. The registration date is then set by the FTA. Missing the 30 days carries an AED 10,000 penalty and the exposure described in VAT penalties in the UAE: the FTA can register you from the date you should have registered, and VAT becomes due on sales made since then.
How to monitor the threshold
The test is rolling, not annual. A business with a 31 December year end that checks turnover once a year will usually find out late. A practical routine:
- Total taxable supplies for the last 12 months at every month end.
- Include zero-rated sales and imports, exclude exempt supplies.
- Add signed contracts due for invoicing in the next 30 days.
- Record the date the test was first met, because the 30 days run from there.
The VAT calculator handles the arithmetic on individual invoices, and bookkeeping that is current to the month end makes the rolling total available when you need it.
Voluntary registration
Voluntary registration is useful when you have taxable expenses but little or no income yet. Once registered you charge VAT on supplies and recover input VAT on costs, subject to the rules in conditions to claim input VAT. The trade-off is the full compliance burden: returns, records and the penalties above. If your customers are mainly consumers who cannot recover VAT, registering also makes you 5% more expensive to them unless you absorb it.
Non-residents and the threshold
The threshold does not apply to a business with no place of establishment or fixed establishment in the UAE. Such a business that makes taxable supplies here must register from the first supply, unless the customer accounts for the VAT under the reverse charge. See non-resident VAT registration.
If you exceed the threshold only temporarily
A business whose supplies pass the threshold on a one-off basis can ask the FTA for an exception from registration. The request needs to explain why the excess is temporary and why turnover is not expected to stay above the threshold. It is a request, not an entitlement, so do not rely on it without confirmation.
After you register
You receive a Tax Registration Number, which must appear on every tax invoice. See the TRN guide and the documents required for VAT registration. If your turnover later falls, deregistration rules apply; read VAT deregistration. For help with the whole process, our VAT registration team prepares and submits the application.
Sources
Thresholds and the 30-day rule are set out in Federal Decree-Law No. 8 of 2017 on VAT and its Executive Regulation, and summarised on the Federal Tax Authority website. The AED 10,000 penalty is covered in the sources listed in our VAT penalties guide.
A worked example
A distributor sold AED 1.1 million of standard-rated goods in the last 12 months, and signed a AED 120,000 supply contract that will be invoiced in 20 days. The business has not registered.
| Test | Figure | Result |
|---|---|---|
| Look-back: last 12 months | AED 1,100,000 | Above AED 375,000: registration was due earlier |
| Look-forward: next 30 days | AED 120,000 expected | Does not change the answer |
The business passed AED 375,000 several months ago. It should register immediately, and it faces the AED 10,000 late registration penalty and VAT on sales since the date it should have registered. Compare a second business with AED 300,000 of sales in 12 months that signs a AED 100,000 contract for delivery next month. It passes the look-forward test on that day and has 30 days to apply.
Common mistakes
- Counting only sales. Taxable imports count too.
- Counting only the invoiced amount. Signed contracts can trigger the 30-day test.
- Testing at year end. The 12 months roll every month.
- Splitting sales across companies. Artificially dividing a business to stay below the threshold is dealt with under anti-avoidance rules, so treat related businesses carefully.
- Forgetting zero-rated sales. Exporters often assume they do not count; they do.
Registering early can help
A business that sells mainly to VAT-registered customers loses nothing by registering, because those customers recover the VAT they pay. It also starts recovering input VAT on its own costs, which for businesses with heavy purchases can outweigh the compliance cost. Businesses selling mainly to consumers weigh it differently. A short model of both positions takes an afternoon and removes the guesswork.
Records that prove your registration date
Keep the monthly turnover workings, the list of contracts you considered for the look-forward test and the date you concluded registration was required. If the FTA later questions the date, these records show that you tested the threshold and acted within 30 days. A business that cannot show the working is in a weaker position than one that can, even when the date was right.
If you operate through several businesses
Each legal entity is tested separately, but the FTA looks at arrangements made to avoid registration. If related businesses share customers, premises or staff, take advice before assuming each can stay below the threshold. In some cases a VAT group is the cleaner route. A VAT health check or a call with our VAT services team can settle the question before it becomes a penalty.
Frequently asked questions
AED 375,000 of taxable supplies and imports in the previous 12 months, or expected in the next 30 days, makes registration mandatory. AED 187,500 is the threshold for voluntary registration.
Yes. Zero-rated supplies such as exports count as taxable supplies. Exempt supplies and supplies outside the scope of VAT do not count.
30 days. Late registration carries an AED 10,000 penalty, and the FTA can register you from the date you should have registered.
Yes, voluntarily, once your taxable supplies, imports or taxable expenses exceed AED 187,500 in the previous 12 months or are expected to in the next 30 days.
No. A non-resident with no establishment in the UAE that makes taxable supplies here must register regardless of value, unless the customer accounts for the VAT under the reverse charge.
You can ask the FTA for an exception from registration where the excess is temporary. It is a request the FTA decides, so confirm the outcome before assuming you are exempt.