Which UAE VAT threshold applies to you: how the supplies test works

Founders often mix up the two UAE VAT registration thresholds. The figures themselves are simple; the difficulty is knowing what to measure against them. This post explains the test itself. For the registration process (documents, EmaraTax steps, deadlines), see our step-by-step guide to UAE VAT registration.

Taxable supplies versus turnover

The threshold is measured on the value of your taxable supplies and imports, not on everything that reaches your bank account. Two consequences follow.

Zero-rated supplies 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 over the mandatory threshold while collecting almost no output VAT.

Exempt supplies do not count. Certain financial services, bare land, local passenger transport and residential property after its first supply are outside the tax, and their value does not push you towards registration.

So a company can look small and still have to register, or look large and not need to. Add up taxable supplies and imports only.

The 12-month and 30-day tests

Registration is mandatory if your taxable supplies and imports exceeded AED 375,000 over the past 12 months, or if you expect them to exceed AED 375,000 within the next 30 days. The 12 months are a rolling period, checked every month, whatever your financial year.

The 30-day test is the one that catches growing businesses. One signed contract to be delivered next month can take you over, and the obligation arises as soon as you can reasonably expect the crossing, before any invoice is issued. If you have just signed something that changes the shape of your year, check the forward test that week.

Once you are required to register, you have 30 days to apply on the FTA’s EmaraTax portal.

Voluntary registration from AED 187,500

Above AED 187,500 you may register, and the test is wider: taxable supplies and imports or taxable expenses over the past 12 months, or expected in the next 30 days. The expenses route is for businesses that have not started selling: you can register on the strength of what you are spending, supported by the invoices.

Voluntary registration usually pays when your customers are VAT-registered businesses and you pay significant input VAT, because registration lets you recover it. It usually does not pay when you sell to consumers, because you add 5% to your prices to recover tax you may barely incur. Registration also brings returns every tax period, including quiet ones.

AED 375,000 appears twice, for different things

AED 375,000 is both the mandatory VAT registration threshold and the corporate tax 0% band, and the two are unrelated.

They measure different things. The VAT threshold measures taxable supplies and imports. The corporate tax band measures taxable income. A consulting company with AED 900,000 of supplies and AED 300,000 of taxable income must register for VAT and pays 0% corporate tax under the standard rules. Treating the two numbers as one rule leads to registering for the wrong tax at the wrong time.

What late registration costs

Missing the 30-day window costs an AED 10,000 late registration penalty (Cabinet Decision No. 40 of 2017, as amended). The larger cost is often the VAT itself: the FTA can register you from the date you should have registered, so VAT is due on sales since then even if you never charged it to customers.

After registration, late returns cost AED 1,000, or AED 2,000 if repeated within 24 months, and unpaid VAT attracts a penalty of 14% a year, charged monthly on the unpaid amount (since 14 April 2026).

Checking where you stand

Keep a rolling 12-month total of taxable supplies and imports, and review it every month. Separate zero-rated from exempt sales in your books from the start, because rebuilding that split later is expensive. If the total is approaching AED 375,000, prepare the registration documents before you cross it, so you can apply as soon as the obligation arises.

For registration and returns handled for you, see our VAT service. The VAT calculator works out the VAT on a specific invoice.

This is general information on UAE rules. It is not legal, tax or immigration advice for your situation. Rules and government fees change; we confirm the position for your facts in writing before you act.