In 2018, the UAE introduced a Value Added Tax (VAT) system, requiring businesses to register once they exceed the mandatory registration threshold for taxable supplies and imports.
Companies that meet the threshold must complete the VAT registration process online through the Federal Tax Authority (FTA) portal. The application involves submitting detailed information about the business structure, activities, and financials. Once submitted, the FTA reviews the application for approval.
Upon successful registration, businesses receive a VAT Registration Certificate with a unique Tax Registration Number (TRN). From that point, they are required to:
Charge VAT on all taxable supplies
File VAT returns regularly
Issue VAT-compliant invoices
VAT registration is not just a legal requirement—it is a crucial step for companies operating in the UAE that exceed the taxable income threshold. Understanding and fulfilling VAT obligations ensures smooth business operations and helps avoid penalties or compliance issues with the tax authorities.
In the UAE—including Dubai and all other Emirates—VAT registration is determined based on a business’s total taxable turnover. Once a company’s revenue reaches AED 375,000, it is legally required to either register for VAT or apply for an exemption, depending on the nature of its supplies.
Before proceeding with registration or filing, it’s important to understand the different types of VAT treatment:
Standard Rate (5%): Applies to most goods and services. Businesses must charge 5% VAT and remit it to the FTA.
Zero-Rated Supplies (0%): Taxed at 0%, but businesses are still eligible to recover input VAT on related purchases.
Exempt Supplies: No VAT is charged, and input VAT recovery is not allowed.
Out-of-Scope Supplies: Transactions that fall outside the UAE VAT system, such as certain international dealings, and are not subject to VAT.
Businesses are required to register for VAT once their taxable turnover reaches AED 375,000.
It’s highly recommended to monitor revenues closely and register before crossing this threshold to avoid non-compliance penalties.
Companies can voluntarily register for VAT if their annual turnover exceeds AED 187,500.
This is often advantageous for growing businesses looking to:
Enhance credibility
Recover input VAT on business expenses
Establish better supply chain relationships
A company does not need to register if:
Its taxable supplies are below AED 187,500, or
It supplies only zero-rated goods or services, such as exports outside the UAE and GCC VAT-implementing states.
If your business exclusively supplies 0% VAT goods or services and your revenue approaches AED 375,000, you can apply for a VAT registration exception.
If approved, no VAT filing is required.
If denied, you must register and file quarterly VAT returns, even though all supplies will be 0%-rated.
To successfully register for VAT in Dubai and other Emirates, business owners must prepare and submit a comprehensive set of documents to the Federal Tax Authority (FTA). Here is the list of documents typically required:
Trade License and/or Commercial Registration Certificate
Certificate of Incorporation (for corporate entities)
Passport and Emirates ID of the business owner(s)
Details of Authorized Signatories
Contact Information of shareholders and authorized persons, including email addresses and UAE mobile numbers
Detailed Bank Account Information (including IBAN)
Financial Statements or Records
Description of Business Activities and anticipated annual turnover
Customs Registration Code, if the company is involved in imports/exports
Any additional documents supporting the company’s operations or VAT eligibility
It is highly recommended to consult with a professional tax advisor or contact the Federal Tax Authority directly to ensure all documentation is complete, accurate, and aligned with current regulations. Proper preparation helps streamline the VAT registration process and ensures compliance with UAE tax laws.
The timeline for VAT registration in the UAE is directly linked to when a business exceeds the prescribed turnover thresholds set by the Federal Tax Authority (FTA). The FTA’s online portal is open for businesses to initiate VAT registration in advance, ensuring timely compliance.
Mandatory VAT Registration:
Must be completed within 30 days of reaching the AED 375,000 taxable turnover threshold.
Voluntary VAT Registration:
Must be completed within 30 days of exceeding the AED 187,500 turnover threshold.
Failure to comply with VAT registration deadlines can lead to severe financial consequences:
Late Registration Fine: AED 10,000 if a business does not register within 30 days after exceeding the threshold.
Late Deregistration Penalty: AED 1,000 per month, up to a maximum of AED 10,000.
Late VAT Payment Fines:
2% of the unpaid tax immediately
An additional 4% if not paid within 7 days
A daily 1% penalty starting after one month, up to a maximum of 300% of the unpaid tax
To avoid these penalties, businesses should monitor their revenue closely, register on time, and meet all VAT-related obligations promptly.
In the UAE, determining whether a business must register for VAT depends on its total taxable turnover, calculated over either the previous 12 months or the upcoming 30 days. Businesses must assess their activities carefully to ensure compliance with registration thresholds set by the Federal Tax Authority (FTA).
Taxable Supplies
This includes the total value of all goods and services subject to VAT—either at the standard 5% rate or zero-rated. Supplies that fall outside the VAT scope should be excluded from this calculation.
Exempt Supplies
These are supplies that are exempt from VAT, such as certain financial services and residential property rentals. Revenue from exempt supplies does not count toward the VAT registration threshold.
Businesses must regularly monitor their revenue to determine whether they exceed:
AED 375,000 for mandatory VAT registration
AED 187,500 for voluntary VAT registration
Failing to register on time can result in significant penalties and fines. Since VAT laws and thresholds may evolve, staying updated with the latest FTA regulations is essential to ensure continued compliance and avoid costly mistakes.
Under UAE VAT regulations, eligible businesses must complete the registration process through the Federal Tax Authority (FTA). Here’s an overview of the current steps involved:
Assess whether your business qualifies for mandatory or voluntary VAT registration based on your taxable turnover.
Gather all necessary documents and information, including your trade license, financial details, shareholder info, and business activity description.
Create an e-Services account on the FTA website, log in, and fill out the online VAT registration form. The form includes eight sections, where you’ll need to enter relevant details and upload supporting documents.
Once all information is complete, submit your application. The FTA will review it and may request additional documents or clarifications during the verification process.
Upon approval, you will receive a VAT registration certificate containing your Tax Registration Number (TRN).
VAT registration is a legal requirement for businesses that meet the eligibility criteria. To ensure full compliance and accuracy in the process, it’s highly recommended to consult a professional tax advisor familiar with UAE VAT regulations.
The UAE offers a VAT group registration option for companies that meet specific criteria. This allows a group of related businesses to register as a single taxable entity, streamlining their VAT obligations. Group registration can help reduce administrative workload, improve compliance, and potentially enhance VAT recovery efficiency.
To qualify, the companies must:
Be related parties, sharing strong organizational, economic, or financial ties (e.g., under common ownership or control).
Be established in the UAE or have a place of residence within the country.
Appoint a representative member who will submit the application to the Federal Tax Authority (FTA) on behalf of the group.
The application must include:
Complete details of each group member.
Proof of the relationship between entities.
Consent from all participating entities to join the VAT group.
Once approved, the VAT group is treated as a single taxable person. This means:
A single VAT return is filed for the entire group.
One VAT payment is made, covering the group’s combined liability.
Businesses planning to register as a VAT group should carefully evaluate the legal and financial implications. It is advisable to consult a qualified tax professional or reach out to the FTA to ensure compliance and make informed decisions.
Apply VAT correctly: Charge the standard 5% VAT on all taxable supplies and clearly reflect it on your invoices.
Keep accurate records: Maintain proper bookkeeping to ensure correct VAT calculations, error-free filings, and smooth input tax recovery. All records must be retained for at least 5 years.
Stick to deadlines: Submit VAT returns and payments on time to avoid penalties.
Stay informed: Regularly check updates from the Federal Tax Authority (FTA) to stay compliant with the latest VAT regulations.
Seek expert guidance: Partner with tax consultants and accountants to minimize risks, prevent legal issues, and focus on growing your business.
At Visakings Dubai, we make managing your business finances easy with dependable accounting and bookkeeping services. Our expert team ensures accurate and timely VAT and tax registration, reporting, and compliance—so you can focus on running your business, stress-free.
By outsourcing your accounting to Emirabiz, there’s no need to hire a full-time accountant. Our skilled professionals use advanced tools to manage your financial tasks efficiently, saving you time, money, and ensuring full compliance with UAE laws.
Need support with VAT registration? Get in touch with us today for a free VAT consultation!
The brand name Visa Kings Global is used under licence by Visa Success Limited. Visa Success Limited is not a firm of solicitors and is not regulated by the Solicitors Regulation Authority. Visa Success Limited does not give financial, legal or tax advice.
Information affecting all users of this website can be found on our Legal Notices page which you are deemed to have read and accepted.
