UAE VAT Registration Threshold: AED 375,000 Rule Explained
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Quick answer: A UAE-based business must generally register for VAT when its taxable supplies and imports exceed AED 375,000 over the previous 12 months, or when they are expected to exceed that amount in the next 30 days. Voluntary registration is available from AED 187,500, including, for that voluntary test, taxable expenses. These figures measure taxable activity, not profit. The standard VAT rate in the UAE is 5 per cent. Foreign businesses can have a different rule. Confirm your position on the Federal Tax Authority’s registration page before you apply or before you buy a business.
Updated 12 November 2026. This is general information, not tax advice. Thresholds, exceptions and filing rules can change. Use the official Federal Tax Authority and UAE government pages, and take professional advice on your own facts.
What the AED 375,000 and AED 187,500 thresholds actually measure
The Federal Tax Authority’s VAT registration page (updated 6 April 2026 at the time we checked it) is the starting point. It says a business must register for VAT if its taxable supplies and imports exceed the mandatory registration threshold of AED 375,000. It may choose to register voluntarily where the total value of its taxable supplies and imports, or its taxable expenses, is in excess of the voluntary registration threshold of AED 187,500.
Two official tests sit under the mandatory threshold:
- the total value of taxable supplies and imports has already exceeded AED 375,000 over the previous 12 months; or
- the business anticipates that the total value of its taxable supplies and imports will exceed AED 375,000 in the next 30 days.
The voluntary test is similar, with two differences: the figure is AED 187,500, and taxable expenses can also count. That second point matters for a new business that is spending on fit-out, stock or professional fees before sales really start. Voluntary registration can allow earlier recovery of input VAT, but it also brings filing and record duties. It is a choice, not a requirement, and it is only available if you meet the official test.
None of this is a profit test. A cafeteria or grocery with tight margins can cross AED 375,000 of taxable supplies long before the owner feels “large”. The opposite is also true: a one-off sale of a capital asset is treated differently. Article 20 of Federal Decree-Law No. 8 of 2017 says the supply of capital assets belonging to the person is not taken into account when you decide whether the registration thresholds have been exceeded. Do not add the sale of the shop’s own premises, for example, into the threshold if the law treats that asset as a capital asset. When the classification is unclear, get advice rather than guessing.
How the rolling 12-month test works
The previous-12-months test is rolling. It does not reset on 1 January. If you are checking the position at the end of November 2026, you look back to December 2025. A strong quarter can push you over the line even if the current month is quiet. The second test looks forward: if you already know that a contract, a seasonal peak or a new branch will take taxable supplies and imports over AED 375,000 in the next 30 days, the obligation can arise before the sales have landed.
Keep a simple monthly schedule of taxable supplies and imports, separate from exempt or out-of-scope amounts, and review it every month. That schedule is also useful later, when you complete a VAT return or when a buyer asks how the business has been trading. Article 19 of the Decree-Law sets out what is added up for the threshold, including taxable goods and services, certain concerned goods and services, and, in defined cases, taxable supplies made by related parties. Related-party sales are easy to miss if you only look at one shop’s till.
The standard 5 per cent rate, and who still has to register
The official UAE government VAT page (updated 28 October 2026 when we checked it) states that VAT was introduced in the UAE on 1 January 2018 and that the rate is 5 per cent. VAT-registered businesses charge VAT on taxable supplies, may recover VAT on eligible business purchases, and must keep records and file returns. If VAT charged is more than VAT incurred, the difference is paid to the government; if it is less, the difference may be reclaimable.
Registration is not only a mainland issue. The official portal notes that certain free zones are specified as designated zones for VAT purposes, and that special rules can apply to supplies in those zones, but that businesses established there may still need to register if they meet the criteria. Do not assume a free-zone licence means you can ignore VAT.
Foreign businesses are not treated the same way
The FTA registration page states that the mandatory registration threshold is not applicable to foreign businesses. The official UAE government page explains the corresponding rule: a non-UAE-based business must register if it makes taxable supplies in the UAE, regardless of value, and there is no other person obligated to pay the due tax on those supplies in the UAE. If you are a non-resident seller, or you are buying a business that makes supplies into the UAE from abroad, do not apply the AED 375,000 test by habit. Use the FTA’s guidance for non-resident taxable persons.
How and when to register
Both the FTA and the official government portal say businesses register through the e-services section on the FTA website, after creating an account. The FTA VAT registration page also links the VAT user guide and a tax-group user guide. If several companies in the same group want to be treated as one taxable person, that is a separate, formal process; do not assume a group structure automatically combines the thresholds in your favour.
Official FTA frequently asked questions state that a person required to register needs to submit a registration application within 30 days of being required to register, and that once an application is submitted or resubmitted the FTA team reviews it and takes a decision within 20 business days. Check those timings on the current FTA pages when you are ready to apply, because service standards and forms can be updated. After registration you will need to file returns and, where VAT is due, make payment on the official timetable. This article does not list late-filing penalty amounts, because we have not reconfirmed a current official penalty schedule for VAT filing in this update.
For the practical walk-through of accounts, certificates and documents, use our existing guide: how to get a VAT certificate in the UAE. That article is about the certificate and the registration process. This one is about the thresholds that tell you whether you must, or may, apply.
What VAT means when you buy or sell a business
VAT is often missed in a rushed sale. A buyer should ask, at least:
- Is the business already VAT-registered, and can the seller show the tax registration number and recent returns?
- If it is not registered, have taxable supplies and imports already crossed, or are they about to cross, AED 375,000?
- Are the sales figures you are being shown consistent with the VAT returns? Our guides on how to buy a business in Dubai and buying a running business in Dubai explain why claimed sales should be tested against source records, not only a spreadsheet.
- Will the transfer be treated as a normal taxable supply of assets, or might it qualify as a transfer of a going concern? That question has its own official FTA guidance. Do not assume a sale is automatically outside the scope of VAT.
- After you buy the business, do the seller’s historic taxable supplies count toward your own threshold? Article 19 of the Decree-Law includes, when calculating the threshold, the value of taxable supplies that belong to a person who has acquired a business, or part of a business, from another person who made those supplies. That can bring a buyer into mandatory registration sooner than the buyer’s own post-completion sales would suggest.
Sellers should get the file in order before the business is marketed: returns, correspondence with the FTA, and a clear explanation of what is included in the price. Outstanding VAT, missing returns or a threshold that has already been crossed and ignored will surface in due diligence. If you are preparing a sale, how to sell a business in Dubai sets out the wider process, and how to value a business in Dubai explains the figures buyers usually test. Business brokers can help you reach buyers, but they do not replace a tax adviser on VAT treatment of the deal.
A practical VAT-threshold checklist
- Write down the legal entity, licence and, if you have one, VAT registration number.
- List monthly taxable supplies and imports for the last 12 months, and keep the invoices that support the list.
- Look 30 days ahead at signed work, seasonal peaks and stock imports.
- Separate capital-asset sales and any related-party supplies, and get advice if the classification is unclear.
- If you are a non-resident, ignore the habit of applying AED 375,000 and use the official foreign-business rule instead.
- If either mandatory test is met, apply through the FTA e-services within the official time limit and keep the submission receipt.
- If you are only over AED 187,500, decide whether voluntary registration is worth the compliance cost, with advice if needed.
- If you are buying a business, add the seller’s VAT file, including whether historic supplies may count toward your threshold, to your due-diligence list.
- Read the FTA registration page and the official government VAT page again on the day you apply, in case a figure or process has been updated.
Which businesses are listed on BusinessFinder.me right now?
When you review a listing, the VAT position is one of the checks, alongside the licence, the lease and the sales. These businesses are listed on BusinessFinder.me right now.
- Premium luxury Transport Company for Sale in Dubai (Al Mezan Tower, Muhaisnah 4, Muhaisnah,)
- Highly Profitable Women’s Fashion Business for Sale in UAE (Publishing Pavilion Building, Dubai Production City)
- Luxury Automotive Workshop for Sale (DIP) Dubai (Dubai Investments Park 2, Dubai Investments)
- Established Medical Centre & Pharmacy for Sale in Dubailand (Palm Jumeirah, Dubai, UAE)
- Highly Scalable Luxury Car Wash Business for Sale in Dubai (Palm Jumeirah, Dubai, UAE)
- Printer Supplies business for sale in Dubai (Meydan Avenue, Meydan, Dubai, UAE)
Key takeaways
- The official mandatory VAT registration threshold for a UAE-based business is AED 375,000 of taxable supplies and imports, tested over the previous 12 months or the next 30 days.
- Voluntary registration is available from AED 187,500, and that voluntary test can also include taxable expenses.
- The figures are not a profit test, and the 12-month test does not reset on 1 January.
- The standard VAT rate, as stated on the official UAE government portal, is 5 per cent.
- The mandatory threshold, the FTA says, is not applicable to foreign businesses; non-resident suppliers can have to register regardless of value in the official circumstances.
- If you buy a business, the seller’s historic taxable supplies can, under Article 19 of the Decree-Law, count toward your own threshold. Use our VAT certificate guide for the registration process itself.
Frequently asked questions
Is the AED 375,000 VAT threshold based on profit?
No. The Federal Tax Authority’s registration guidance uses taxable supplies and imports, not profit after expenses. A business can be required to register even if it is not profitable, if those supplies and imports go over the threshold.
Can a business register before it reaches AED 375,000?
Yes, if it meets the voluntary test. The FTA says a business may apply to register if the value of its taxable supplies and imports, or its taxable expenses, has exceeded AED 187,500 in the previous 12 months, or is expected to exceed that amount in the next 30 days.
Does the threshold reset on 1 January each year?
No. One official test looks at the previous 12 months on a rolling basis. The other looks at expected taxable supplies and imports in the next 30 days. A quiet January does not wipe out the previous eleven months.
Do foreign businesses use the same AED 375,000 threshold?
The FTA states that the mandatory registration threshold is not applicable to foreign businesses. The official UAE government portal explains that a non-UAE business must register if it makes taxable supplies in the UAE and no other person is obligated to pay the due tax on those supplies, regardless of value. Check the FTA’s specific guidance for your case.
How do I actually apply, and is there a deadline once I have to register?
Applications are made through the FTA’s e-services after you create an account, as explained on the official UAE government VAT page and the FTA registration page. Official FTA frequently asked questions state that a person required to register needs to submit the application within 30 days of being required to register, and that the FTA reviews a submitted application within 20 business days. Confirm both timings on the current FTA pages when you apply.
If I buy a UAE business, could the seller’s past supplies affect my VAT registration?
They might. Federal Decree-Law No. 8 of 2017, Article 19, includes, when you work out the threshold, the value of taxable supplies that belong to a person if that person has acquired a business, or part of a business, from someone who made those supplies. This is one reason a buyer should look at the seller’s VAT position, not only at the asking price. Our step-by-step guide on how to get a VAT certificate in the UAE explains the certificate and registration process in more detail.