VAT registration in Dubai

Mandatory or voluntary: which applies to you

Registration is mandatory when the value of your taxable supplies and imports exceeds AED 375,000 over the previous 12 months. It is also mandatory when you expect to exceed AED 375,000 in the next 30 days. The 12-month test looks back on a rolling basis, not by calendar year, so a strong few months can push you over the line.

Taxable supplies include standard-rated sales at 5% and zero-rated sales such as exports. Exempt supplies, such as residential rent, do not count towards the threshold. Imports of goods and services you receive from abroad do count.

Voluntary registration is open when your supplies or your taxable expenses exceed AED 187,500. The expenses test matters for new businesses: a company with large fit-out or equipment costs but few sales yet can register early and recover the VAT on those costs.

Timing and the effective date

The FTA expects you to apply within 30 days of becoming required to register. Your registration has an effective date, which is normally the date you crossed the threshold or the start of the 30-day period in which you expected to. VAT is due on taxable supplies from that date, even if your TRN arrives later.

This is why delay is expensive. If you register late, the AED 10,000 late registration penalty applies, and the FTA can assess VAT on sales made since your effective date. If you did not charge VAT to customers in that time, the tax may come out of your own margin.

We work out your effective date before we file, using your sales records month by month. If you are already past the deadline, we tell you plainly and file straight away to limit further exposure.

What happens after you get your TRN

Once registered, every tax invoice you issue must show your TRN, the VAT charged at the correct rate and the other details the FTA requires. Prices displayed to consumers must include VAT. We check your invoice template so your first invoices are right.

You will be assigned tax periods, usually quarterly. Your first return is due by the 28th day after the end of your first period, even if you made few sales. A registered business must file every period, including periods with no activity.

Your bookkeeping needs to separate output VAT and input VAT from day one. If you use accounting software, we can set up the VAT codes so the return figures come straight from your books.

Why applications get delayed

Most delays come from avoidable gaps. The FTA often asks for clarification when the business activity on the licence does not match the turnover evidence, when the authorised signatory's documents are missing or expired, or when the turnover figures are not supported by invoices or accounts.

Another common issue is a mismatch between the legal name on the licence and the name on the bank account or other documents. We check these points before submission, which reduces the chance of a query and keeps the process moving. If a query does come, a quick and complete answer is the best way to keep your application on track.

If two or more UAE companies are under common control, they may be able to register as a tax group. Group registration simplifies filing but brings joint liability for VAT, so we explain the trade-off before you decide.

Is voluntary registration worth it?

Voluntary registration makes sense when you pay a lot of VAT on costs that you would otherwise lose. Typical cases are new businesses with high set-up costs, and businesses whose customers are mostly VAT-registered companies that can recover the VAT you charge them.

It is less attractive when most of your customers are consumers. They cannot recover VAT, so you either raise prices by 5% or absorb the tax. You also take on the cost and discipline of filing a return every period. We set out the numbers for your business so the decision is based on figures, not guesswork.