VAT Registration and filing is mandatory for all businesses registered in the UAE having an annual turnover of more than AED 375,000 (Roughly USD 100,000). Register for VAT and maintain VAT compliance through Filings.ae.
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Understanding VAT registration criteria in the UAE is important for businesses to comply with tax regulations and operate smoothly. UAE businesses must register for VAT if their taxable supplies and imports exceed AED 375,000 annually (AED 187,500 for voluntary registration), except for specific exempt activities like education, healthcare, and first-supply residential real estate. This article explores the criteria for VAT registration in detail for both UAE and Non-UAE based businesses, offering clarity on why it's essential for businesses of all sizes.
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There are two main criteria for VAT registration in the United Arab Emirates (UAE),
Businesses whose supplies and imports are above AED 187,500 can opt for VAT registration voluntarily.
All businesses incorporated in the UAE whose taxable supplies and imports exceed AED 375,000 in 12 months must complete VAT registration. Additionally, businesses anticipating their taxable supplies and imports to reach this threshold within the next 30 days must also register. In contrast, non-UAE businesses making taxable supplies to UAE customers must register for VAT regardless of the threshold limit. Ensure you keep clear records of invoices, receipts, and expenses to avoid penalties, support the claim, and simplify the audit.
Mandatory VAT registration in UAE | ||
Business Type | Registration Threshold | Conditions |
Resident | AED 375,000 per annum | Exceeds this value in the previous 12 months or Anticipated to exceed within the next 30 days during the current financial year |
Non-Resident | Not Applicable | Mandatory registration under VAT, irrespective of threshold limit |
Note:
Businesses that prefer to register VAT and do not yet meet the mandatory registration conditions can voluntarily apply for VAT registration. However, the annual supplies or taxable expenses incurred should not be less than AED 187,500. Here, including taxable expenses as criteria helps the startups or businesses with lesser turnover value register under VAT. At the initial stages, startups will have zero turnover or lesser but high taxable expenses, so this specific criteria helps them for VAT registration.
Voluntary VAT registration in UAE | |
Threshold Limit | Condition |
Value of Supplies/Taxable Expenses exceeds AED 187,500 | In the previous 12 months or Anticipated to exceed in the next 30 days during the current financial year |
Also read: How to get VAT registration in UAE?
Following are the business activities and specific goods & services which are exempted from VAT registration even if they meet the threshold limit.
Following are the consequences businesses could face if it is not registered under VAT in UAE.
Learn about: Tips to Avoid VAT Late Payment Penalty in UAE
Being clear about VAT registration criteria in the UAE is crucial for business compliance. Whether mandatory or voluntary registration, understanding the criteria ensures smooth operations and compliance and prevents legal complications. Remember VAT registration exemptions for specific activities in UAE and clear record-keeping for audits. Contact Filings.ae experts for tailored guidance and navigate the UAE's VAT system with confidence.
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