Do you have to register for VAT?

How this is calculated

Two thresholds, two different tests

Registration becomes compulsory once your taxable turnover passes AED 375,000, and it is optional from AED 187,500. Both are tested two ways: looking back over the previous twelve months, and looking forward at the next thirty days. Either test can trigger it on its own, so a single signed contract can make you liable before your books show anything.

The application is due within 30 days. Registration takes effect from the first day of the following month, and VAT on sales made in the meantime still has to be paid over even though you could not yet charge it.

What counts, and what deliberately does not

This is where most self-checks go wrong. Zero-rated sales count. A zero-rated supply is still a taxable supply under Article 44, so exports and qualifying healthcare or education push you towards the threshold exactly like a standard-rated sale. Reverse-charge imports count as well.

Left out, and the FTA's own guide says so in as many words: exempt income and the one-off sale of a capital asset. A company that sells a building in one year does not become liable because of it.

An asymmetry worth knowing: for the voluntary threshold your own taxable expenses count too. For the compulsory threshold they never do. That is how a start-up spending heavily before it earns anything can register early and recover VAT on its setup costs.

Zero-rated is not the same as exempt

Only four categories are exempt: certain financial services, residential property, bare land and local passenger transport. Everything else is 5 %, 0 % or outside the scope entirely. Someone who says their income is “VAT-free” almost always means zero-rated, and the difference is real money: with zero-rated you recover input VAT in full, with exempt income the VAT on your costs simply becomes a cost.

A free zone address does not change the answer

A person established in a designated zone is treated as resident in the UAE, with the full registration obligation. And services are always onshore and taxable at 5 %, whatever the zone: the designated zone concept is about the movement of goods through customs, not about services. Most of the well-known business free zones, including DMCC, DIFC, IFZA and ADGM, are not designated zones at all.

What late registration costs

A fixed penalty of AED 10,000, plus 14 % a year on tax that should already have been paid, charged for each month started and with no ceiling since April 2026. The old 300 % cap is gone, which means the arrears now grow without limit the longer registration is left.

What this tool does not do

• It takes your classification as given. Deciding whether a particular sale is standard-rated, zero-rated, exempt or outside the scope is the harder half of the question.
• It does not cover tax groups, or the separate rules for non-residents making supplies into the UAE, where there is no threshold at all.
• It says nothing about deregistration, which has its own thresholds and a twelve-month lock-in after a voluntary registration.