What is VAT Registration?
Value Added Tax (VAT) was introduced in the UAE on January 1, 2018 at a standard rate of 5%. VAT registration is mandatory for businesses meeting revenue thresholds set by the Federal Tax Authority (FTA). Once registered, businesses receive a unique Tax Registration Number (TRN) and must charge VAT on taxable supplies.
Tax Registration Number
15-digit TRN required on all tax invoices
5% Standard Rate
Applied to most goods and services
Quarterly/Monthly Filing
Returns due by 28th of following month
Input Tax Recovery
Offset VAT paid on business purchases
VAT Registration Thresholds
Current Thresholds (2024-2025)
Important: Register within 30 days of exceeding the mandatory threshold. Late registration penalty: AED 10,000 (updated per Cabinet Decision No. 49 of 2021). Non-resident businesses must register regardless of turnover.
Registration Process
Documents Required
VAT Penalties
Per Cabinet Decision No. 49 of 2021 and FTA regulations:
| Violation | Penalty |
|---|---|
| Late VAT registration | AED 10,000 |
| Late VAT return filing (1st offence) | AED 1,000 |
| Late VAT return filing (repeat within 24 months) | AED 2,000 |
| Late VAT payment - immediate | 2% of unpaid tax |
| Late VAT payment - after 7 days | +4% additional |
| Late VAT payment - ongoing | 1% daily (max 300%) |
| Incorrect tax return (1st offence) | AED 3,000 |
| Incorrect tax return (repeat) | AED 5,000 |
| Failure to keep records (1st offence) | AED 10,000 |
| Late VAT deregistration | AED 1,000/month (max AED 10,000) |
Frequently Asked Questions
The FTA typically processes VAT applications within 2-3 weeks after submission. With our preparation, the entire process takes 3-5 business days.
Mandatory: AED 375,000 in taxable supplies/imports over 12 months. Voluntary: AED 187,500. Non-resident businesses must register regardless of threshold.
Yes. Free zone companies must register if they meet threshold requirements. Designated zones have special treatment for goods, but services follow standard VAT rules.
VAT returns are due by the 28th day of the month following your tax period. Most businesses file quarterly; those with revenue above AED 150 million file monthly.