VAT registration threshold: what it means in UAE tax.
The meaning of vat registration threshold under UAE VAT law: how it works, a worked example in AED, common mistakes and the legal references.
UAE businesses must register for VAT once taxable supplies and imports pass AED 375,000 in 12 months, and may register voluntarily above AED 187,500.
What vat registration threshold means
Also called: Mandatory registration threshold, Voluntary registration threshold.
The VAT registration thresholds decide when a UAE resident business must, or may, register for VAT. The mandatory registration threshold is AED 375,000 and the voluntary registration threshold is AED 187,500, both set in the Executive Regulation.
A business with a place of residence in the UAE must register if the value of its taxable supplies and relevant imports exceeded AED 375,000 over the previous 12 months, or is expected to exceed it in the next 30 days. Zero rated sales count, because they are taxable supplies. So do imported goods and services on which the business would account under the reverse charge. Sales of capital assets are left out, and in some cases the FTA can add the supplies of related parties together.
A business below the mandatory level may register voluntarily if its taxable supplies, or its standard rated expenses incurred in the UAE, exceeded AED 187,500 in the previous 12 months or are expected to in the next 30 days. A non-resident has no threshold at all and must register as soon as it makes taxable supplies in the UAE on which no one else accounts for the VAT. For a growing SME the test is rolling, so it should be checked every month, not only at the year end.
How it works
- Past test: at the end of each month, add up the last 12 months of counted supplies. If the total is over AED 375,000, the business must register.
- Future test: if a signed contract or order means supplies will exceed AED 375,000 in the next 30 days, registration is required now.
- The application is due within 30 days of the obligation arising. Under the past test, registration takes effect from the first day of the following month, whether or not the business applies.
- A business that registers late must account for VAT on all taxable supplies and imports made since it should have been registered.
- Failing to apply for registration on time carries a penalty of AED 10,000 under the penalty table in force from 14 April 2026.
Worked example
A Dubai marketing consultancy checks its rolling total at the end of May 2026. It also buys software services from an overseas provider, which it would account for under the reverse charge.
| Taxable sales, June 2025 to May 2026 | AED 360,000 |
| Imported services under the reverse charge | AED 22,000 |
| Total counted towards the threshold | AED 382,000 |
| Mandatory registration threshold | AED 375,000 |
| Amount over the threshold | AED 7,000 |
The consultancy crossed the threshold at the end of May 2026, so its registration takes effect from 1 June 2026 and it must apply within 30 days.
Common mistakes
- Counting only local sales and leaving out imported services and goods caught by the reverse charge.
- Counting the wrong figures: exempt sales and sales of capital assets are left out, while zero rated sales are included.
- Ignoring the 30 day forward test when a single large contract will push supplies over the threshold.
The law
- Federal Decree-Law No. 8 of 2017 on Value Added Tax, Article 13 (Mandatory Tax Registration), Article 17 (Voluntary Registration), Article 19 (Calculating the Tax Registration Threshold) and Article 20 (Capital Assets)
- Cabinet Decision No. 52 of 2017 (VAT Executive Regulation), Article 7 (Mandatory Registration) and Article 8 (Voluntary Registration)
- Cabinet Decision No. 40 of 2017 on Administrative Penalties, as amended by Cabinet Decision No. 129 of 2025, Table No. 1, item 3
Frequently asked questions
Do zero rated sales count towards the threshold?
Yes. Zero rated sales are taxable supplies, so exporters and other zero rated businesses count them in the same way as standard rated sales.
Is there a threshold for a foreign company selling in the UAE?
No. A person with no place of residence in the UAE must register as soon as it makes supplies in the UAE on which no one else is required to account for the VAT.
Related terms
Taxable supply · Zero-rated supply · Reverse charge mechanism · Tax registration number. See every term in the UAE tax glossary.
For the full picture, read our guide: EmaraTax Explained: A Plain English Guide for UAE Business Owners.
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