Any person conducting business in the UAE must register for Value Added Tax if the value of taxable supplies or imports exceeds the mandatory registration threshold of AED 375,000 over the previous 12 months, or is expected to exceed it within the next 30 days, and may register voluntarily once the voluntary registration threshold of AED 187,500 is exceeded.
The Mandatory Registration Threshold
The Executive Regulation of the Decree-Law provides that the mandatory registration threshold is (375,000) three hundred and seventy-five thousand dirhams. If the value of taxable supplies and imports made by a person during the previous twelve months exceeds this threshold, or is expected to exceed it within the coming thirty days, that person must apply for tax registration within the deadlines set by the Executive Regulation.
The Voluntary Registration Threshold
Any person not obliged to register mandatorily may apply for voluntary registration if the value of their taxable supplies or taxable expenses during the previous twelve months exceeded the voluntary registration threshold, or at any time it is expected that this value will exceed the voluntary registration threshold within the coming thirty days. The Decision implementing the Decree-Law set the voluntary registration threshold at AED 187,500 exactly.
How the Threshold Is Calculated
To determine whether a person has exceeded either threshold, the total value of taxable goods and services is aggregated together with the value of imported concerned goods and services, and the value of taxable supplies attributable to that person where the business of another person has been wholly or partly acquired, in accordance with the rules set out in the Decree-Law. This combined calculation is meant to prevent the artificial splitting of a business to avoid reaching the registration threshold.
Special Provisions
- A non-resident person may not take into account the value of imported goods and services for the purpose of determining eligibility for registration where the tax on those goods or services is payable by the importer under the reverse charge mechanism.
- The Authority may, upon request, exclude a taxable person from registration if all of that person's supplies are subject to the zero rate only.
Illustrative Example
Illustrative example: if a business achieves taxable supplies exceeding AED 375,000 over the previous twelve months, it becomes obliged to register for Value Added Tax, whereas if its supplies reach only AED 187,500 without exceeding the mandatory threshold, it may register voluntarily without being obliged to do so.
Legal References
- Cabinet Decision No. (52) of 2017 on the Executive Regulation of Federal Decree-Law No. (8) of 2017 on Value Added Tax — Article (7)
- Federal Decree-Law No. (8) of 2017 on Value Added Tax — Article (17), Article (18) and Article (19)
For questions about your specific situation, you can ask the UAE Tax & Legislation Helper on Helpers, or consult a licensed chartered accountant.