How to Register for VAT in the UAE: Thresholds, Documents and Deadlines

VAT in the UAE is charged at 5%, and a business must register with the Federal Tax Authority once its turnover passes a set threshold. The application is free, made online, and not difficult in itself.

What costs businesses money is the timing. Most late registrations are not deliberate. The owner was watching the wrong number, or watching the right number over the wrong period, and passed the threshold months before noticing.

When registration becomes mandatory

You must register when either of these is true:

• Your taxable supplies and imports over the previous 12 months exceeded AED 375,000.
• You expect your taxable supplies and imports to exceed AED 375,000 in the next 30 days.

The first test is a rolling one. It is not your calendar year, your financial year or your licence year. At the end of every month you look back twelve months, and the month the total crosses AED 375,000 is the month the clock starts.

The second test catches people out more often. A new company that signs one contract worth AED 400,000, due next month, has to register now, even though it has not yet issued a single invoice.

What counts towards AED 375,000

The figure is the value of what you have supplied, measured on invoices and not on money received. An unpaid invoice counts in full.

• Counts: standard-rated sales, which are most goods and services sold in the UAE.
• Counts: zero-rated sales, such as exports and international transport. They carry 0% VAT but are still taxable supplies.
• Counts: goods and services you import, where you would have to account for the VAT yourself.
• Does not count: exempt supplies, such as residential rent and certain financial services.
• Does not count: the sale of capital assets, such as selling the company vehicle.

Zero-rated sales are the usual surprise. A trading company that only exports charges no VAT to anyone and still has to register once its exports pass the threshold. A business that makes nothing but zero-rated supplies can apply to the FTA for an exception from registration, but that is something you apply for, and it is not automatic.

Registering voluntarily

You may register once your taxable supplies or your taxable expenses exceed AED 187,500. The expenses route matters for a new business: a company spending heavily on fit-out, stock and equipment before it has made a sale can register on its costs and reclaim the VAT it is paying.

It is worth doing when most of your customers are VAT-registered businesses, who reclaim the 5% you charge them, or when your start-up costs carry a lot of VAT. It is less attractive when you sell to the public, because your prices rise by 5% or your margin falls by it. Registration also brings a return to file every period, so it is a commitment and not a formality.

Documents the FTA asks for

• Trade licence, valid and unexpired.
• Passport and Emirates ID of the owners, partners and the authorised signatory.
• Memorandum of Association, or a power of attorney, showing the signatory’s authority.
• Company contact details and the address of the place of business.
• Bank account details, including the IBAN, in the company’s name.
• Evidence of turnover: invoices, contracts or purchase orders, and bank statements that agree with them.
• Customs registration details, if you import or export.

The turnover evidence is where applications stall. The FTA wants to see the figures you declare supported month by month, and a total typed into the form with nothing behind it draws a query. Check too that the company name, address and activity read the same on the licence, the bank letter and the application. Small differences between documents are a common reason for an application being sent back.

How to apply

1. Create an account on EmaraTax, the FTA’s online portal, and add the business as a taxable person.
2. Start the VAT registration application and complete the business details, the owner and manager details, and the bank details.
3. Enter your turnover for the past twelve months and your expected turnover, and upload the evidence.
4. State the date you became liable to register. This date decides when you start charging VAT, so it needs to be right.
5. Submit, and answer any questions the FTA sends back through the portal.
6. Receive your Tax Registration Number (TRN) and registration certificate.

With a complete file, the FTA normally issues the TRN within about 20 business days. Each query adds time, and the application has to be resubmitted with the answer.

The 30-day deadline and what late registration costs

You have 30 days from the date you became required to register to submit the application. Missing it carries a fixed penalty of AED 10,000.

The penalty is usually the smaller part of the cost. Your registration is backdated to the date it should have started, and VAT is due on every sale you made from then on. If you did not charge your customers the 5%, it comes out of your own margin, and late-filing and late-payment penalties are added for the periods you missed.

After you have your TRN

• Charge VAT from your effective date of registration, and show your TRN on every tax invoice.
• Issue tax invoices within 14 days of the supply.
• File a return for every period, even one with no sales. Most businesses file quarterly, and the return and payment are due by the 28th day after the period ends.
• A late return costs AED 1,000 the first time and AED 2,000 if it happens again within 24 months.
• Keep your VAT records for at least five years.

Common mistakes

• Measuring turnover by calendar year and not by the rolling twelve months.
• Counting money received and not invoices issued.
• Leaving out exports and other zero-rated sales.
• Assuming a free zone company is outside VAT. The same thresholds apply.
• Waiting until the application is approved to think about pricing, when VAT is due from the effective date.
• Treating VAT registration and corporate tax registration as the same thing. They are separate, with separate numbers and separate returns.

If you are close to the threshold or unsure whether you have passed it, the first step is a month-by-month look at the last twelve months of invoices. We do that review, tell you whether and when you have to register, and prepare the file so the application goes through the first time.