Who Needs to Register for VAT in the UAE? A Comprehensive 2026 Guide
The United Arab Emirates (UAE) continues to reframe its tax landscape, and as of 2026, Value Added Tax (VAT) remains the major player of nation’s economic diversification. For entrepreneurs, established business owners, and even high-income individuals, the question of VAT registration in the UAE is no longer just about compliance; it is about strategic financial management.
Since its introduction in 2018, VAT has evolved. The primary step to avoid potential VAT registration penalties is to identify which turnover threshold your business falls under. i.e., Voluntary or mandatory. This blog explains in detail who needs to register for VAT, the applicable thresholds and nuances of registration for various entities.
1. The Thresholds: Mandatory vs. Voluntary Registration
The Federal Tax Authority (FTA) has come up with two primary thresholds based on the value of your taxable supplies and imports. It is very important to note that the term taxable supplies covers both standard-rated (5%) and zero-rated (0%) supplies of goods and services.
Mandatory VAT Registration UAE (Turnover Threshold: AED 375,000)
As per the VAT regulations, the business or individual must register for VAT if:
· In the previous 12 months, the total value of their taxable supplies and imports exceeded AED 375,000 or
· They are expecting the total value of their taxable supplies and imports to exceed the threshold of AED 375,000 within the next 30 days.
Voluntary VAT Registration UAE (Threshold: AED 187,500)
Even if you haven't reached the mandatory limit, you may choose to register for VAT under the voluntary threshold if:
· Your taxable supplies and imports (or at least taxable expenses) exceeded AED 187,500 in the previous 12 months.
· You expect your taxable supplies or expenses to cross this threshold in the next 30 days.
CFO Tip: Voluntary registration is beneficial for start-ups. Even if you have zero revenue, incurred expenses over AED 187,500 allow you to register and reclaim the 5% VAT paid on your incorporation costs, office rent and other equipment
2. VAT Registration for Businesses in Dubai and the Mainland
The applicability of VAT rules is direct for companies operating on the UAE mainland. Whether you are a retail shop in Al Quoz or a consultancy firm in Downtown Dubai, the turnover threshold is the sole decider.
· Commercial Entities: Limited Liability Companies (LLC), Joint Ventures and Public Joint Stock Companies should register for VAT once they reach the threshold.
Sole Establishments:
Where an individual owns more than one sole establishment, the total turnover from all such businesses is considered together. If the combined turnover exceeds AED 375,000, VAT registration becomes applicable for the individual.
Foreign Businesses:
Non-resident businesses that supply goods or services in the UAE are required to register for VAT when no other party is responsible for accounting for VAT on those supplies. In such cases, registration applies from the first taxable supply, irrespective of turnover levels.
To learn more about Who Needs to Register for VAT in UAE?, book a free consultation with one of the Flyingcolour team advisors.
Disclaimer: The information provided in this blog is based on our understanding of current tax laws and regulations. It is intended for general informational purposes only and does not constitute professional tax advice, consultation, or representation. The author and publisher are not responsible for any errors or omissions, or for any actions taken based on the information contained in this blog.