A Guide to VAT Registration for Businesses in the UAE

 

Value Added Tax (VAT) was introduced in the UAE on January 1, 2018, and is now a key part of business setup in the UAE. At a flat 5% rate, it applies to most goods and services across the country. Here's a simplified summary of everything businesses need to know to stay VAT-compliant: 

- Who Needs to Register for VAT? 

1. Mandatory Registration 
You must register if your taxable turnover exceeds AED 375,000 in: 

  • The past 12 months, or 
  • The next 30 days (projected revenue) 

2. Voluntary Registration 
You may register if your turnover crosses AED 187,500, which is ideal for startups or SMEs wanting to reclaim VAT on expenses. 

3. Non-Resident Registration 
Foreign businesses must register for VAT regardless of turnover and appoint a UAE-based tax agent. 

- How to Register for VAT in the UAE? 

Step-by-step process include the following: 

  • Create an account on the Federal Tax Authority (FTA) portal 
  • Complete the VAT registration form with business details 
  • Submit documents like trade license, Emirates ID, financials, and bank details 
  • If approved, a Tax Registration Number (TRN) is issued in 5–20 business days 

- VAT Group Registration 

Businesses with multiple UAE entities can register as a VAT group if: 

  • All entities are based in the UAE 
  • They're financially or managerially linked 

Benefits include: 

  • One consolidated VAT return 
  • No VAT on inter-group transactions 

- VAT Deregistration 

A business can cancel its VAT registration if: 

  • It stops making taxable supplies 
  • Its turnover drops below AED 187,500 for 12 months 
  • It’s been voluntarily registered and remains under AED 375,000 for a year 

- VAT Returns & Deadlines 

VAT returns must be filed either: 

  • Quarterly (if revenue is below AED 150M), or 
  • Monthly (if revenue is above AED 150M) 

Returns are due within 28 days of the end of each tax period. 

Late filing penalties: 

  • AED 1,000 for the first offense 
  • AED 2,000 for repeat offenses 
  • Late payments attract escalating fines starting from AED 500 

- Who Can Get VAT Refunds? 

Eligible for refunds: 

  • Businesses that paid more VAT on purchases than sales 
  • Tourists (via airport kiosks) 
  • Non-resident businesses at UAE exhibitions 
  • UAE nationals building their first home 

- VAT Exempt vs Zero-Rated Sectors 

Exempt Sectors (No VAT charged or reclaimed) include: 

  • Residential rents 
  • Life insurance 
  • Local transport 

Zero-Rated Sectors (0% VAT but can reclaim input VAT) are: 

  • Exports 
  • International transport 
  • Healthcare and education 

Stay Compliant, Stay Ahead 

Being VAT-compliant in the UAE is about protecting your operations from costly errors. Whether you’re registering for the first time, managing VAT groups, or applying for refunds, proactive compliance is key. 

Want the full insights with updated rules and steps? 
Read the full guide on our website and simplify your VAT journey in the UAE. 

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