UAE VAT Registration Threshold

The UAE VAT registration threshold determines when a business must register for Value Added Tax (VAT) and when registration is optional. The mandatory threshold is AED 375,000 and the voluntary threshold is AED 187,500, both set by the Federal Tax Authority (FTA).

This guide is for founders whose turnover is approaching either figure. It explains what counts toward the thresholds, how the two timing tests work and the deregistration rules, with worked examples. For the registration procedure itself, see our step-by-step UAE VAT registration guide.

UAE VAT thresholds at a glance

Four threshold rules matter: two for registering and two for deregistering. All figures below are official FTA thresholds as of mid-2026.

What counts toward the threshold

The thresholds measure taxable supplies and imports, not total revenue, and the difference matters most for businesses with zero-rated or exempt income. Zero-rated supplies, such as most exports, are still taxable supplies at a 0% rate, so they count. Exempt supplies do not count at all.

A consultancy invoicing AED 300,000 locally and exporting AED 100,000 of services is therefore typically over the mandatory line, while a landlord collecting AED 500,000 of purely residential rent may not need to register at all.

The two timing tests: 12-month look-back and 30-day forward

Liability can arise from what you have already sold or from what you are about to sell, so two separate tests apply.

1. Rolling 12-month test. At the end of each month, total your taxable supplies and imports for the previous 12 months. If the total exceeds AED 375,000, you usually have 30 days to submit a registration application.
2. 30-day forward test. If there are reasonable grounds to expect that the next 30 days alone will take you over AED 375,000, for example a signed contract or a confirmed large order, you must register even though the look-back total is still below the threshold.

The 12-month window is rolling; it is not tied to the calendar year or your financial year. Here is a simplified worked example of a growing business:

In this example the obligation crystallises at the end of August, the first month end where the rolling total exceeds AED 375,000. You can run your own monthly figures through the VAT registration threshold checker to see where you stand.

Non-resident businesses: no threshold

A business with no place of residence in the UAE cannot rely on either threshold. If it makes taxable supplies in the UAE and no other person is obliged to account for the VAT on them, it must generally register regardless of value, according to official u.ae guidance. This commonly affects foreign e-commerce sellers and service providers selling to UAE consumers.

Deregistration thresholds

The thresholds also work in reverse. Under FTA rules, a registrant must apply to deregister within 20 business days if it stops making taxable supplies or if taxable supplies over the previous 12 months fall below AED 187,500. Deregistration is optional if supplies fall below AED 375,000 but stay above the voluntary threshold. A final VAT return is due within 28 days of the effective deregistration date. Businesses that registered voluntarily are commonly expected to stay registered for at least 12 months first; the trade-offs are covered in our guide to mandatory vs voluntary VAT registration.

Edge cases founders ask about

The threshold applies per legal entity, not per branch, so a company with three branches aggregates all their taxable turnover into one calculation. Related resident legal persons can apply to form a tax group and register as a single taxable person. Seasonal businesses should take care: one strong quarter can push the rolling total over the line even when the annual average looks safe. As a rule of thumb, once your rolling total passes roughly AED 150,000, reviewing the calculation monthly is sensible.

What to do once you cross a threshold

Registration is submitted through the FTA’s EmaraTax portal, usually takes about 45 minutes to complete and is free; the paperwork is listed in our VAT registration documents checklist. If VAT is entirely new to you, start with VAT basics for new UAE businesses. And if you would rather have a professional confirm your position, you can compare VAT registration support from verified consultants.

FAQ

What is the VAT registration threshold in the UAE?

The mandatory threshold is AED 375,000 in taxable supplies and imports over the previous 12 months, or expected within the next 30 days. The voluntary threshold is AED 187,500. Both figures are set by the Federal Tax Authority and have applied since VAT was introduced in 2018.

Can I register for VAT voluntarily below the mandatory threshold?

Yes. A business may register voluntarily once its taxable supplies, imports or taxable expenses exceed AED 187,500 over the previous 12 months, or are expected to in the next 30 days. Voluntary registration lets you recover input VAT but brings filing obligations, and deregistering again is usually only possible after a period of registration.

What happens if I do not register for VAT when required?

The FTA can register you compulsorily and impose an administrative penalty for late registration, currently AED 10,000; penalty amounts are periodically revised, so verify the current figure with the FTA. You may also have to account for VAT you should have charged on past sales, which can be a significant cost.

Can I register for VAT with zero turnover?

Usually yes, through the voluntary route based on taxable expenses. A pre-revenue startup whose taxable expenses exceed AED 187,500 may apply, and the FTA typically asks for evidence such as a minimum of five VAT invoices addressed to the business. A business with no sales, no expected sales and no qualifying expenses cannot normally register.

Is VAT registration mandatory for free zone companies?

Free zone companies follow the same AED 375,000 threshold as mainland businesses. Being in a free zone, including a designated zone, does not exempt a company from VAT registration; designated-zone rules only change how certain supplies of goods are treated. If taxable supplies and imports exceed the threshold, registration is usually required.

Has the UAE VAT registration threshold changed?

No. The mandatory threshold of AED 375,000 and the voluntary threshold of AED 187,500 have remained unchanged since VAT was introduced on 1 January 2018. Thresholds can be amended by Cabinet Decision, so confirm the current figures on the FTA website before relying on them.

Is the threshold calculated per branch or per legal entity?

Per legal entity. All branches of the same company count as one taxable person, so their taxable supplies and imports are added together when testing the threshold. A business cannot avoid registration by splitting turnover across branches, and artificially splitting a business across entities may also be challenged.

Do zero-rated sales count toward the VAT threshold?

Yes. Zero-rated supplies, such as most exports of goods and services, are taxable supplies at a 0% rate and count toward both thresholds. Exempt supplies, such as bare residential rent and local passenger transport, do not count. A business making only zero-rated supplies may be able to request an exception from registration.

How long does VAT registration take once I apply?

The FTA indicates that a complete application is typically processed within about 20 business days, and that the online form itself takes roughly 45 minutes. Applications with missing or unclear documents take longer because the FTA asks for resubmission. Registration itself is free of charge.

When must a business deregister from VAT?

A registrant must usually apply to deregister within 20 business days if it stops making taxable supplies or if taxable supplies over the previous 12 months fall below AED 187,500. Deregistration is optional below AED 375,000. A final VAT return is due within 28 days of the effective deregistration date.