AED 375,000 is mandatory, AED 187,500 is voluntary — but the test runs on taxable supplies, not revenue, and it looks forward 30 days as well as back 12 months.
There are two VAT thresholds in the UAE, and almost every founder we speak to remembers the wrong number for the wrong reason. AED 375,000 makes registration mandatory. AED 187,500 makes it optional. What trips people up is not the figures — it is what you are supposed to measure against them.
The threshold test runs on the value of your taxable supplies and imports, not on everything that lands in the bank account. Two consequences follow immediately.
Zero-rated supplies still count. A 0% rate is still a taxable rate — exports of goods and certain services are taxed, just at zero. A business that exports almost everything can be well past the mandatory threshold while collecting almost no output VAT at all.
Exempt supplies do not count. Certain financial services, bare land, local passenger transport and residential property after the first supply sit outside the system entirely, and their value does not push you towards registration.
So a company can look small and be required to register, or look large and not be. Add up the right line, not the revenue line.
Registration is not only a rear-view test. You must register if your taxable supplies and imports exceeded the mandatory threshold over the previous twelve months, or if you expect them to exceed it within the next thirty days.
The forward test is the one that catches growing businesses. A single signed contract that will be delivered next month can put you over, and the clock starts from the expectation, not from the invoice. If you have just closed something that changes the shape of your year, check the thirty-day test the same week — not at year end.
At AED 187,500 you may register, and the test there is wider: taxable supplies and imports or taxable expenses over the previous twelve months, or expected in the next thirty days. That expenses limb exists for pre-revenue businesses — you can register before you have sold anything, on the strength of what you are spending.
It is worth doing when your customers are VAT-registered businesses and you are carrying real input VAT, because registration lets you recover that input tax. It is usually not worth doing when you sell to consumers, since you would be adding 5% to your price in exchange for recovering tax you may barely incur. Registration also brings filing obligations that do not switch off in a quiet quarter.
This one causes genuine confusion, so it is worth stating plainly: AED 375,000 is both the mandatory VAT registration threshold and the corporate tax 0% band — and they are unrelated.
They measure different things. The VAT threshold measures taxable supplies. The corporate tax band measures taxable profit. A consulting company with AED 900,000 of supplies and AED 300,000 of profit is required to register for VAT and pays 0% corporate tax. The identical number in two different regimes is a coincidence of drafting, not a single rule, and treating it as one is how businesses end up registered for the wrong tax at the wrong time.
Pull a rolling twelve-month total of taxable supplies — not calendar-year, rolling — and look at it monthly rather than annually. Separate zero-rated from exempt in your books now, while the volume is small, because reconstructing that split later is expensive. And if the rolling total is approaching the mandatory threshold, apply before you cross it rather than after: registration is a filing, and filings take time you will not have in the month you go over.
If you want the mechanics rather than the thresholds, our VAT service page sets out what registration and returns actually involve, and the VAT calculator covers the arithmetic on a specific invoice.
We reply with numbers — a line-by-line setup estimate for your case. Not a call script, not a brochure.