Value Added Tax has applied in the UAE since 1 January 2018 under Federal Decree-Law No. 8 of 2017, at a standard rate of 5%. It is one of the first compliance obligations a new business runs into, and getting registration right early avoids penalties and cash-flow surprises later.
Do You Need to Register?
- Mandatory registration: required once your taxable supplies and imports exceed AED 375,000 over the preceding 12 months, or are expected to exceed that threshold in the next 30 days.
- Voluntary registration: available once taxable supplies, imports or taxable expenses exceed AED 187,500 — useful for start-ups that want to recover input VAT before crossing the mandatory threshold.
The Registration Process
VAT registration is done through the FTA's EmaraTax portal. You will typically need your trade license, Emirates ID and passport copies for the owners/managers, and evidence of turnover or projected turnover (contracts, invoices or financial statements). Once approved, the FTA issues a Tax Registration Number (TRN), which must appear on every tax invoice you issue.
Filing and Payment
Most businesses file VAT returns quarterly, though the FTA assigns some businesses a monthly filing period based on their turnover. Returns — and any VAT due — are generally payable by the 28th day of the month following the end of the tax period. Filing "nil" returns is still required even in periods with no VAT-able activity.
Common Mistakes We See
- Registering late and facing avoidable penalties
- Charging VAT on exempt or zero-rated supplies incorrectly, or vice versa
- Tax invoices missing the TRN or the required VAT breakdown
- Reclaiming input VAT on expenses that are specifically blocked, such as entertainment costs
- Forgetting to deregister when turnover falls below the threshold and the business no longer needs to charge VAT
VAT rates and thresholds reflect UAE VAT Law as of the publication date and are provided for general guidance only. Always confirm current requirements with the FTA or your tax advisor before making decisions specific to your business.