The two thresholds
Registration becomes mandatory once the value of your taxable supplies and imports exceeds AED 375,000. Voluntary registration opens at AED 187,500, and can be based on taxable expenses rather than supplies — which is why a business that is spending heavily before it earns anything can still register.
The standard rate of VAT in the UAE is 5%. Some supplies are zero-rated and some are exempt, and the difference matters a great deal: a zero-rated supply is still a taxable supply and still counts towards your threshold, while an exempt one does not.
It is measured on a rolling 12 months, not a financial year
This is where most businesses get caught. The backward-looking test asks whether your taxable supplies over the previous twelve months exceeded the threshold — any previous twelve months, rolling forward each month. It does not reset in January, and it does not wait for your year end.
So a business that turned over AED 30,000 a month quietly all year has crossed the line by month thirteen, without a single month looking remarkable.
The forward-looking test people forget
There is a second test, and it is the one that catches growing businesses: if at any point you expect your taxable supplies to exceed AED 375,000 within the next 30 days, registration becomes mandatory then — not when the money actually arrives.
Win a contract on the first of the month that will clearly take you past the threshold inside it, and the obligation starts with the expectation, not the invoice.
Turnover, not profit
The threshold is measured on what you supply, not on what you keep. A trading business on a 4% margin reaches AED 375,000 of supplies long before it has made anything worth taxing. Thin-margin businesses are consistently the most surprised by this.
- Include standard-rated and zero-rated supplies
- Include imported goods and services you account for under the reverse charge
- Exclude exempt supplies
- Exclude the sale of capital assets
What registration actually commits you to
Registration is not a one-off form. From the effective date you charge VAT on your taxable supplies, issue tax invoices that meet the required content, keep the records behind them, and file a return for every tax period — on time, whether or not there is anything to declare.
Returns are filed and paid within 28 days of the end of each tax period. Most businesses are on quarterly periods. A period with no activity still needs its nil return.
And when you should stop
De-registration is an obligation too, not an option. If you stop making taxable supplies, or your supplies fall below the voluntary threshold, you are required to apply to de-register within the prescribed window. A dormant registration that keeps missing returns builds up exactly the same problems as an unregistered business that should have registered.
Last reviewed: 20 September 2026. This article is general guidance on published UAE tax rules as at the review date above. It is not advice for your specific circumstances, and the rules change. Confirm your own position with us before acting on anything here.