VAT for new founders in the UAE

When you must register

A business resident in the UAE must register for VAT when either of these is true:

• Its taxable supplies and imports in the UAE exceeded AED 375,000 over the previous 12 months.
• It expects its taxable supplies and imports to exceed AED 375,000 in the next 30 days.

Exempt supplies and supplies outside the scope of VAT do not count toward the threshold. Once you are required to register, you have 30 days to submit your application to the Federal Tax Authority (FTA).

When you can register early

You may register voluntarily when your taxable supplies and imports, or your expenses subject to VAT, exceeded AED 187,500 over the previous 12 months, or are expected to exceed it in the next 30 days.

Because expenses count, a new business can reach the voluntary threshold on its setup spending before it has many sales. The FTA treats a valid tax invoice as the main evidence a registered business needs to recover VAT on its costs.

One registration, not one per licence

• A company registers once, even if its branches hold several trade licences.
• A person and all their sole establishments count as one person for VAT, so they register once.
• If you are required to register but make only zero rated supplies, you can apply to be excepted from registration.

What to prepare

The FTA's VAT registration service asks for:

• Your trade licence and commercial registration, plus your certificate of incorporation, memorandum of association or partnership agreement where it applies.
• Emirates ID and passport copies of the owners and authorised signatories.
• An official declaration letter stating your total taxable supplies and monthly sales.
• Supporting documents, such as invoices, contracts or purchase orders.
• A bank account letter, which is optional.
• Customs information, if it applies to you.

Files must be PDF, up to 15 MB each. You apply through an account on EmaraTax, the FTA's online platform. The FTA lists registration as free and estimates 20 business days to complete an application from the date it receives it complete.

What changes after you register

• You charge 5% VAT on your standard rated sales.
• You issue a tax invoice within 14 calendar days of each taxable supply. A full tax invoice shows the words tax invoice, your name, address and Tax Registration Number, the date, a description of what you supplied and the VAT amount in dirhams, among other details.
• You file your VAT return and pay any VAT due within 28 days from the end of each tax period.

Simple habits that help

• At the end of every month, add up your taxable supplies and imports for the last 12 months and compare the total with AED 375,000.
• Look ahead too: a large contract can put you over the threshold within the next 30 days.
• Keep every supplier's tax invoice from the start.

Our free finance templates help you keep these numbers in one place, and your first year plan shows when your sales are likely to reach the threshold.