VAT Registration Threshold in the UAE
What this page covers
VAT Registration Threshold in the UAE
In the UAE, a business must register for VAT when its taxable turnover exceeds AED 375,000. Zero-rated supplies can still count toward this registration threshold.
The threshold can apply to both mainland and free zone companies. Free zone status does not automatically remove VAT obligations once the business meets the threshold.
In brief
- Check your turnover against the AED 375,000 mandatory VAT registration threshold, including zero-rated supplies where they form part of taxable turnover.
- Most free zone companies follow the same UAE VAT rules as mainland businesses once they meet the registration threshold.
- After registration, the company must be ready for ongoing VAT compliance, including return filing, correct invoicing, and proper record keeping.
What to do
Start with a clear turnover review. The key mandatory VAT registration threshold is AED 375,000. Zero-rated supplies may still be part of taxable turnover, so companies serving overseas clients should not exclude those sales without checking the VAT treatment.
Free zone companies also need a proper VAT assessment. Most free zones are within the scope of UAE VAT, and companies operating there may need to register and charge VAT like mainland businesses once the threshold is met.
VAT registration is only the first step. Once registered, a company needs to file VAT returns on time, keep supporting records, and apply the correct invoice treatment for standard-rated, zero-rated, and other supplies.
What to keep in mind
Designated Zone treatment is limited. Certain designated zones may be treated as outside the UAE for VAT purposes, but this applies only to specific goods transactions and does not cover every free zone activity.
Goods movements can change the VAT position. If goods leave a designated zone and enter mainland UAE, import VAT may need to be accounted for by the recipient under the applicable VAT rules.
Services need particular attention. Services provided by a free zone company to a UAE customer are generally subject to VAT unless they qualify for zero-rated treatment under the UAE VAT rules.