The headline numbers are simple. Mandatory VAT registration applies once taxable supplies and imports exceed AED 375,000. Voluntary registration is available from AED 187,500. What causes trouble is the counting.
Two tests, not one
The mandatory threshold uses a rolling backward test and a forward test. You must register if taxable supplies and imports exceeded AED 375,000 over the previous 12 months, or if you expect to exceed it within the next 30 days. The second test catches businesses that win a large contract: the obligation can arise from the expectation, before the revenue has actually landed.
It is a rolling 12 month window, not a financial year. A business that reviews this only at year end will find the threshold was crossed months earlier.
What counts
Standard-rated supplies, zero-rated supplies, imported goods and services subject to reverse charge, and the value of any relevant business assets transferred. Exempt supplies do not count towards the registration threshold. Voluntary registration can also be based on taxable expenses rather than supplies, which is what allows a pre-revenue business with significant costs to register.
Timing and the backdating problem
Once liable, the application must be submitted within 30 days. Registration takes effect from the first day of the month following the month the obligation arose, which means VAT can be due from a date earlier than the day you applied. Miss the 30 days and there is a fixed AED 10,000 penalty, plus the VAT you should have collected from the crossing date.
Free zones are not exempt
Free zone companies are subject to the same thresholds. Designated Zone treatment affects the movement of goods, not services, and it is not a registration exemption.
Should you register voluntarily?
Registering early lets you recover input VAT on setup costs, and it can matter commercially, since larger customers often prefer to deal with registered suppliers. Against that, you take on a permanent filing obligation. A registered business must file for every assigned period even with no activity, and a nil return filed late attracts the same penalty as any other. Dormant companies that registered voluntarily and then stopped filing are a common source of avoidable fines.
After registration
Most businesses are assigned quarterly periods; those with turnover above AED 150 million are generally assigned monthly. Returns are due within 28 days of the period end. See VAT return filing.
General guidance, not advice on a specific business. Figures here were checked against published sources in September 2026; UAE tax rules change frequently, so confirm current Federal Tax Authority and Ministry of Finance guidance, or ask us to review your position, before acting.