What is the threshold for VAT registration in UAE?

In the UAE, the threshold for mandatory VAT registration is AED 375,000, while voluntary VAT registration is permitted for businesses with a turnover of AED 187,500. VAT registration UAE can be done in both cases, whether the value of taxable supplies exceeds the threshold in the previous 12 months or is anticipated to be exceeded in the next 30 days. This article delves deeper into the mandatory and voluntary VAT registration threshold, its taxable supplies, and the exemptions.

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Threshold for Mandatory VAT Registration

In UAE, the threshold for mandatory VAT registration stands at AED 375,000 per year. This threshold is calculated based on the total value of taxable supplies made by a business over 12 months, excluding exempted supplies. The goods, services, and imports come under the taxable supplies, while specific services such as healthcare and education are exempted. Businesses can determine their eligibility for registration using either the turnover from the previous 12 months or by anticipating their turnover for the next 30 days. Failure to register for VAT when required can lead to penalties and fines.

Threshold for Voluntary VAT Registration

Businesses exceeding AED 187,500 in the overall value of annual supplies or taxable expenses can voluntarily register for VAT. The taxable expenses are included, since the startups will have a lower yearly turnover but high expenses for setting up their business. This helps them to enjoy the benefits under VAT, though it has not reached the required threshold for mandatory VAT registration. However, it's essential to consider the additional administrative burden and potential time commitment before deciding on voluntary registration.

How to Register for VAT?

If you reach the threshold requirements for either of the registration types, you can apply for VAT. In the following, you can find the step-by-step process for VAT registration in UAE.

1. Check your eligibility:

• Determine if you meet the mandatory or voluntary thresholds (as discussed above) for taxable supplies.
• Gather necessary documents like trade license, Emirates ID, financial statements, and business plan (for voluntary registration).

2. Create an FTA account:

• Visit the FTA website
• Click "Register" and select "Taxpayer (Directly)."
• Fill out the online form and verify your email.

3. Apply for VAT registration:

• Log in to your FTA account.
• Navigate to "eServices" and click on "VAT Registration."
• Choose "New Registration" and complete the application form.
• Upload required documents and submit.

4. Pay registration fee (if applicable):

• If applying for voluntary registration, a non-refundable fee is required.
• Pay the fee online through your FTA account.

5. Receive confirmation and instructions:

• The FTA will review your application within 20 business days.
• You'll receive your Tax Registration Number (TRN) and further instructions upon approval.

Conclusion

Understanding the thresholds for VAT registration in the UAE is crucial for businesses to ensure compliance with tax regulations. Whether aiming to comply with mandatory registration requirements or considering voluntary registration, companies must carefully assess their turnover to determine their eligibility. By following the outlined steps and staying informed about any updates, businesses can complete the VAT registration process efficiently and avoid potential penalties. Connect with Filings.ae experts to complete the VAT registration with less time and reliably.

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