VAT registration in the UAE: thresholds, who must register and how

Value added tax has applied in the UAE since 2018, and the rules are simpler than in most European systems. There is one standard rate, one main threshold, and one portal. What catches owners out is not the complexity but the timing: registration is tied to a turnover figure that you can pass without noticing, and the obligation starts from that point, not from when you get around to it.

This guide covers who has to register, who may choose to, and what happens once you do.

The rate and the thresholds

VAT in the UAE is levied at 5 per cent at the point of sale. Two figures decide whether you register:

• AED 375,000 a year: mandatory registration. Once the taxable supplies and imports of a UAE based business exceed this figure, registration is required.
• AED 187,500 a year: voluntary registration. Businesses above this figure but below the mandatory threshold may register if they choose to.

Both figures count taxable supplies and imports, not profit. A business with thin margins can pass the mandatory threshold while making very little money.

Businesses based outside the UAE

The thresholds above apply to UAE based businesses. A business that is not resident in the UAE but makes taxable supplies here must register regardless of the value of those supplies. There is no minimum to hide behind. If you run a company abroad and sell into the UAE, assume registration applies and check the specifics for your situation.

Should you register voluntarily?

Voluntary registration lets you recover the VAT you pay on your own costs. That is worth something if you buy a lot of taxable goods and services, or if you are building something capital heavy before revenue arrives. It is worth less if your customers are consumers who cannot recover the 5 per cent you now add to your prices.

Registration also brings the filing obligation with it. Once you are registered, you file whether or not you traded in the period. Weigh the recoverable VAT against the ongoing administration before you opt in early.

How registration works

Registration goes through the e-Services section of the Federal Tax Authority (FTA), the tax authority for the UAE. The FTA runs its services on the EmaraTax platform, and the same login later carries your returns and payments.

When the application is approved you receive a Tax Registration Number, usually called a TRN. That number belongs on your invoices, and your customers will ask for it. Practically, this is the point where your bookkeeping has to be in order: you cannot file an accurate return later from records you did not keep at the time.

If you are coming from Scandinavia

Danish, Swedish and Norwegian owners tend to arrive with assumptions from home, and most of them do not transfer. The UAE rate is 5 per cent, not 25. The registration threshold is a different number on a different basis. The reporting calendar is set by the FTA rather than chosen by you. Nothing about your Danish VAT registration follows you here, and nothing about your UAE registration helps you at home.

If you hold companies in both places, they are two separate obligations that happen to belong to the same owner.

What comes next

Registration is the start of a cycle rather than a one off task. Once you hold a TRN you file returns on the schedule the FTA assigns you, and you pay within the same window. That is covered in filing VAT returns in the UAE.

Want someone to handle it?

Digi-Tal keeps the books, VAT and compliance in order for UAE companies from our own Dubai entity, at a fixed price from 995 AED a month excluding VAT. Tell us about your company and we will come back to you within one business day.

Sources: thresholds and rate from the UAE Government portal, Register for VAT. Rules change, so check your own position against the Federal Tax Authority before acting.