Registration is mandatory once taxable supplies and imports exceed AED 375,000§, measured over the previous 12 months or expected in the next 30 days, and the application is due within 30 days§ of becoming required to register. Registration is voluntary from AED 187,500§, where taxable expenses also count. The standard rate is 5%§.
Chart data
| Threshold | Amount |
|---|---|
| Voluntary registration from | AED 187,500 |
| Mandatory registration above | AED 375,000 |
How does the 12-month test work?
It is rolling, not annual. At the end of every month, add up taxable supplies and imports for the twelve months just ended. The financial year plays no part. A hypothetical consultancy billing AED 28,000 a month signs one AED 90,000 project in March: the twelve months to the end of March now total AED 398,000, which is over the line, whatever its year end. Businesses that check once a year are the ones that find out months late.
What is the 30-day test?
You must also register if you expect to pass the threshold in the next 30 days. A signed contract that will be invoiced next month can trigger this on its own. For a business that has just won something much larger than its usual work, the obligation can arrive before the money does.
How long do I have to apply once I cross?
The VAT Executive Regulation gives 30 days§ from the date you become required to register. Waiting does not move your start date: where a person does not apply, the FTA registers them from the date they first became liable, and the VAT on sales made in between is still due. The penalty for a late application is AED 10,000§.
Should a small business register voluntarily?
Below AED 375,000 but above AED 187,500§, registration is a choice, and taxable expenses count towards that test as well as sales. That matters for a business that spends before it earns: a studio fitting out premises, or a trading company buying stock ahead of its first season, may qualify on expenses alone.
The case for registering early is recovering input tax on those costs. The case against is that you take on the whole compliance cycle: a return every tax period, invoices in the required form, and records to support them. Price the filing work for a year against the input tax you would actually recover before you volunteer.
What counts as taxable supplies?
Not your bank deposits, and not every invoice you raise. It is the value of supplies within the scope of VAT, plus imports. Businesses with a mix of standard-rated, zero-rated and exempt activity cannot read the figure off a sales report, and that is a reasonable point to involve an accountant rather than guess. Register late and you have a penalty and a backlog; register without needing to and you have signed up for four returns a year.
How do I register?
Registration runs through the FTA's EmaraTax platform. Whatever documents the application asks for, prepare the twelve-month turnover workings that show when you crossed the threshold before you open the form. People skip that step, and it is the one that decides your effective date of registration.
- Work out the month you first crossed the mandatory threshold, or the date you expected to within 30 days.
- Count 30 days from that point. That is your application deadline.
- Apply on EmaraTax and keep a copy of the turnover workings with the application.
- From the effective date, charge VAT on taxable supplies and issue invoices in the required form.
What happens after registration?
The standard tax period is three calendar months§, ending on a date the FTA sets, and each return with its payment is due 28 days§ after the period ends. In money, most small businesses fold VAT preparation into a bookkeeping fee of AED 500–2,500 a month¤; one online provider sells a VAT-ready package at AED 999–3,413 a month¤, charged annually. Missing a return date costs AED 1,000, or AED 2,000 for a repeat§.
Questions owners ask
My sales are AED 350,000 but I import goods. Do imports count? Yes. The mandatory test is on taxable supplies and imports together, so imports can tip a business over.
I crossed the threshold three months ago and did not notice. What now? Apply straight away. The FTA will date the registration from when you became liable, so the sooner the application and the backdated VAT workings are in, the smaller the problem. This is worth a registered tax agent's time.
Is there a separate threshold for corporate tax? The corporate tax figure of AED 375,000 is a band of taxable income, not a registration test, even though the number is the same. The corporate tax guide explains who has to register for that tax.