Who must register for VAT in the UAE?
A UAE business must register for VAT when its taxable supplies and imports exceed AED 375,000 over the previous 12 months, or are expected to exceed it in the next 30 days. Check the test at every month end and apply within 30 days of becoming liable.
| Registration type | Threshold | Who it applies to |
|---|---|---|
| Mandatory | Taxable supplies and imports over AED 375,000 (past 12 months or next 30 days) | UAE businesses and individuals carrying on business |
| Voluntary | Taxable supplies and imports, or taxable expenses, over AED 187,500 | UAE businesses below the mandatory threshold |
| Non-resident | No threshold | Foreign businesses making taxable supplies in the UAE when no one else must account for the VAT |
| Exception | Mandatory threshold reached, but all supplies zero-rated | Apply to the FTA; if approved, no returns and no input tax recovery |
What counts towards the threshold:
- Standard-rated and zero-rated sales, and imports of goods and services.
- Not exempt supplies, such as residential rent. A business whose supplies are all exempt does not register.
Common traps:
- The rules apply to anyone carrying on an economic activity in the UAE, even without a trade licence.
- One person's sole establishments share one TRN and combined turnover; a company's branches register under the head office.
- The FTA can combine the turnover of related businesses split artificially to stay under the threshold.
Non-resident businesses
The AED 375,000 threshold does not apply to foreign businesses. A non-resident must register if it makes taxable supplies in the UAE and no other person must account for the VAT. If its buyer is a UAE VAT registrant, the buyer usually accounts for the VAT under the reverse charge; sales to consumers or unregistered buyers are what can trigger registration. The non-resident registers on EmaraTax as "Legal Person - Foreign Business", with no trade licence, and may appoint a UAE tax agent.
Voluntary registration
Voluntary registration opens once taxable supplies and imports, or taxable expenses, pass AED 187,500 in the past 12 months or the next 30 days. The expenses route lets a start-up with no sales recover VAT on set-up costs, if it shows it carries on business in the UAE and intends to make taxable supplies. Registration usually takes effect on the first day of the month after you apply.
UAE VAT rates: 5%, zero-rated and exempt supplies
The UAE charges VAT at a standard rate of 5%, in force since 1 January 2018. Zero-rated supplies carry 0% and keep input tax recovery; exempt supplies carry no VAT and lose it.
| Treatment | Examples | Input tax |
|---|---|---|
| Standard rate (5%) | Most goods and services; sales and leases of commercial property | Recoverable |
| Zero rate (0%) | Exports of goods and services outside the GCC; international transport; certain investment precious metals; first supply of new homes within three years of construction; qualifying education and healthcare | Recoverable |
| Exempt | Certain financial services; residential buildings other than zero-rated ones; bare land; local passenger transport | Not recoverable |
Exported services are zero-rated only if conditions are met. Under Article 31 of the VAT Executive Regulation, the customer must have no place of residence in a GCC VAT implementing state. It must also be outside the UAE when the service is performed. Services directly connected with UAE real estate, or with goods then in the UAE, do not qualify. Zero-rating can also fail if someone in the UAE, such as the client's employee, receives the service and could not fully recover VAT on it.
Free zones and designated zones
Free zone companies face the same thresholds as mainland companies. Special rules apply only in a designated zone: a free zone listed in Cabinet Decision No. 59 of 2017 and its amendments that meets the fencing and customs conditions in Article 51 of the Executive Regulation. Goods moved between designated zones under customs suspension can be outside VAT; goods consumed there are taxed, and services supplied there are taxed as UAE supplies. Check the FTA's published list of designated zones and confirm with your free zone authority. To compare zones, see UAE free zones and mainland vs free zone.
How much does UAE VAT registration cost and how long does it take?
The FTA charges no fee for VAT registration and states a processing time of 20 business days from receipt of a complete application.
| Item | Official position (checked 22 Oct 2026) |
|---|---|
| FTA registration fee | Free |
| FTA processing time | 20 business days from a complete application |
| Deadline to apply | Within 30 days of becoming liable |
| Effective date, 12-month test | First day of the month after the month you became liable |
| Effective date, 30-day test | The date you had reasonable grounds to expect to cross the threshold |
The FTA can approve, reject or return an application, and it asks for more information by email. Common causes of queries, from the FTA's own guidance:
- Figures in the form that the turnover declaration letter and documents do not support
- Expected sales not backed by contracts or purchase orders signed by both parties
- Designated zone traders who have not explained their business flow and supply chain
- A bank account not in the company's name (bank details are optional but advised for refunds)
FTA services are available only through UAE Pass, so whoever logs in needs a UAE Pass account.
VAT tax groups, branches and related companies
Two or more related UAE legal persons can register as one VAT group with a single TRN. Each member needs a place of establishment or fixed establishment in the UAE and must make taxable supplies or import concerned goods or services. Relationship means, for example, 50% or more common voting or market value interests, or control by other means.
- Supplies between members can be disregarded, so intra-group charges usually carry no VAT.
- Every member is jointly liable for the group's VAT.
- A group cannot be formed if members' combined taxable supplies and imports do not exceed AED 375,000.
After registration: invoices, returns, payments and records
Once registered, you must charge VAT, invoice correctly, file on time and keep records.
- Tax invoices: issue within 14 days of the date of supply, showing "Tax Invoice", your TRN, the customer's TRN if registered, and the VAT in AED. Prices shown to customers must include VAT.
- Tax periods: quarterly below AED 150 million of annual turnover; monthly at AED 150 million or more. The FTA can assign another period.
- Returns and payment: both due within 28 days of the end of each tax period, through EmaraTax. You can pay by eDirham or credit card, eDebit, or local or international bank transfer.
- Refunds: excess input tax is first offset against tax and penalties due. Since 1 January 2026, you must claim the balance within five years of the end of the tax period in which it arose.
- Records: keep invoices, credit notes, import documents and accounts for five years after the end of the tax period they relate to, and real estate records for 15 years. Since 1 April 2026, keep them two years longer while a refund application awaits an FTA decision, and longer during an FTA audit or dispute.
- Changes: report changes to your tax record, such as a new address or activity, within 20 business days.
Corporate tax is a separate registration and return; see UAE corporate tax.
Deregistration
You must apply to deregister within 20 business days if you stop making taxable supplies and expect none in the next 12 months. The same applies if taxable supplies and expenses over the past 12 months are below AED 187,500 and will stay below it for the next 30 days. Between AED 187,500 and AED 375,000 it is optional, but a voluntary registrant cannot deregister within 12 months of registering. The FTA's service card shows a 30 business day deadline, but the Executive Regulation says 20, so apply within 20. The FTA states 30 business days to process a complete application. The final return and payment are due within 28 days of the effective date, and assets you keep are treated as supplied just before deregistration.
UAE VAT penalties in 2026
Cabinet Decision No. 129 of 2025 amended the tax penalty tables from 14 April 2026, cutting several fines and changing how late payment is charged. Current amounts under Cabinet Decision No. 40 of 2017 as amended:
| Violation | Penalty |
|---|---|
| Registration application not filed within 30 days | AED 10,000 |
| Deregistration application filed late | AED 1,000, then monthly, up to AED 10,000 |
| VAT return filed late | AED 1,000; AED 2,000 if repeated within 24 months |
| VAT paid late | Monthly penalty at 14% a year on the unpaid tax, for each month or part month |
| Incorrect return | AED 500, unless corrected before the return deadline or by a voluntary disclosure with no tax difference |
| Voluntary disclosure of an error | 1% a month on the tax difference |
| Error found after an audit notice, with no prior disclosure | 15% of the tax difference plus 1% a month |
| Required records not kept | AED 10,000; AED 20,000 if repeated within 24 months |
| Changes to the tax record not notified | AED 1,000; AED 5,000 if repeated within 24 months |
| Prices not shown inclusive of VAT | AED 5,000 |
| Tax invoice or credit note not issued on time | AED 2,500 per case |
A late registrant is registered from the date it first became liable and owes VAT on all taxable supplies and imports since then, even if it never charged customers. You can object to a penalty under the Tax Procedures Law.
What changed in UAE VAT in 2026?
Three sets of changes took effect in 2026 besides the new penalties, and e-invoicing comes next:
- 1 January 2026, VAT law: Federal Decree-Law No. 16 of 2025 removed the self-invoice for reverse charge imports, though you still account for the VAT and keep documents. It set a five-year limit on refunds of excess input tax. The FTA can now reject input tax on supplies linked to tax evasion if you knew, or should have known; FTA Decision No. 13 of 2026 sets the supplier checks expected.
- 1 January 2026, Tax Procedures Law: Federal Decree-Law No. 17 of 2025 gives a one-time window to 31 December 2026 to claim or use credit balances whose five-year limit had already lapsed.
- 1 October 2026, Executive Regulation: Cabinet Decision No. 149 of 2026 clarified input tax on employee accommodation and single composite supplies. It also allows input tax to be denied on cash payments above a limit the Minister of Finance will set. A new apportionment method follows for tax years starting after 1 October 2027.
- E-invoicing: businesses with revenue of AED 50 million or more must appoint an accredited service provider by 30 October 2026 and go live by 1 January 2027. Others must appoint one by 31 March 2027 and go live by 1 July 2027. Input tax recovery will then need the electronic invoice. See UAE e-invoicing.
Worked example: when does a new Dubai company register?
Priya opens a Dubai free zone consultancy in January 2026. She bills UAE clients AED 30,000 a month and an Indian client AED 10,000 a month. The Indian fees meet the export conditions, so they are zero-rated but still count towards the threshold.
| Month end | Taxable supplies in the past 12 months | Position |
|---|---|---|
| September 2026 | AED 360,000 | Below AED 375,000 |
| October 2026 | AED 400,000 | Liable to register |
She must apply within 30 days. Under Article 7 of the Executive Regulation, the FTA registers her from 1 November 2026 whether or not she applies.
Her first quarterly return, in AED:
| Line | Value | VAT |
|---|---|---|
| Fees to UAE clients (5%) | 90,000 | 4,500 |
| Fees to the Indian client (0%) | 30,000 | 0 |
| Software from an Indian supplier (reverse charge) | 3,000 | 150 output, 150 input |
| Flexi-desk and local services | 12,000 | 600 input |
| Laptops | 6,000 | 300 input |
| VAT payable | 3,600 |
Output tax is AED 4,650 and recoverable input tax AED 1,050, so she pays AED 3,600 within 28 days of the quarter end. Paying a month late adds about AED 42 (14% a year, charged monthly). Applying late would cost AED 10,000, with VAT from 1 November 2026 still due.
Setting up from India: GST vs UAE VAT
UAE VAT works like India's GST: a consumption tax with credit for tax paid on business inputs.
| Point | India GST | UAE VAT |
|---|---|---|
| Main rates | 5% and 18%, with 40% on a few items (from 22 September 2025) | 5% standard, 0% zero rate |
| Registration threshold | Goods: Rs 40 lakh or Rs 20 lakh (state option); services: Rs 20 lakh (Rs 10 lakh in special category states) | AED 375,000 mandatory; AED 187,500 voluntary |
| Exports | Zero-rated; can be made under bond or Letter of Undertaking without paying IGST | Zero-rated when the export conditions are met |
What this means for India and UAE trade:
- Services from India: if the supply qualifies as an export of services under GST rules, the Indian supplier can zero-rate it under section 16 of the IGST Act, usually under a Letter of Undertaking. The UAE company accounts for 5% VAT under the reverse charge and, if fully taxable, recovers it.
- Goods from India: an unregistered importer pays 5% import VAT before customs releases the goods. A registered importer that meets the FTA's conditions, including giving its customs registration number, accounts for it in the VAT return instead.
- Imports and refunds: add your customs registration number if you import, or border clearance can be delayed, and give bank details in the company's legal name for refunds; see corporate bank account.
For the full journey, including FEMA rules for Indian residents, see business setup in Dubai from India.
How Ofin helps with VAT registration
Ofin's UAE desk handles VAT from the threshold check to deregistration. Ofin Legal has a 4.9★ Google rating and has served 5,000+ clients since 2019.
- Threshold check and choice of mandatory or voluntary route
- EmaraTax set-up, turnover declaration and supporting evidence
- Filing the application and answering FTA queries until the TRN is issued
- Monthly or quarterly returns, refund claims and VAT ledger reconciliation
- Audit-ready records and deregistration when the business changes
The desk also handles corporate tax registration, accounting, and India and UAE tax and FEMA advice. Ofin cannot shorten the FTA's processing time or promise its decision, but a complete first application helps avoid the usual queries. Call or WhatsApp Ofin's UAE desk on +971 50 523 5779.
