Key Takeaways
- You must register once taxable supplies and imports go above AED 375,000. From AED 187,500 you may register by choice (VAT Executive Regulation and the FTA's VAT registration page, as of October 2026).
- You have 30 days from the date you become liable to apply. Register late and you still owe VAT on every taxable sale made since that date.
- Free zone companies pay VAT like everyone else. The exception is narrow: a fenced area on the FTA's Designated Zones list can be treated as outside the UAE, and only for VAT on goods.
- Registering late costs AED 10,000. A late return costs AED 1,000, rising to AED 2,000 if it happens again within 24 months (Cabinet Decision 40 of 2017 as amended by Cabinet Decision 129 of 2025, from 14 April 2026).
- Being in a VAT Designated Zone tells you nothing about Corporate Tax, which has its own free zone conditions (Ministerial Decision 229 of 2025).
A new company has to register for value added tax (VAT) once its taxable supplies and imports go above AED 375,000. Below that figure, registration is up to you. The Federal Tax Authority (FTA), which runs VAT in the UAE, applies both the mandatory threshold and the lower voluntary limit. Further down you'll find how free zones are treated, the steps on EmaraTax and the penalties, all as of October 2026.
VAT registration in the UAE, who must register and when
You have to register when your taxable supplies and imports over the previous 12 months went past AED 375,000. Supplies here means the goods and services you sell. The same applies when you expect to pass that figure within the next 30 days (VAT Executive Regulation, Article 7, amended by Cabinet Decision 100 of 2024). From the day you became liable, the FTA must receive your application within 30 days.
The test looks at what you sell, not what you earn. Take a new company that invoices AED 400,000 for services in its first year and still makes a loss. It has crossed the threshold all the same.
Non-residents are treated differently. A foreign business making taxable supplies in the UAE registers with no threshold at all, as long as nobody else has to account for the VAT on those supplies (VAT Law, Article 13). VAT is a federal tax. A company licensed in Abu Dhabi, Sharjah or Dubai deals with the same authority and the same limits.
Missing the deadline can hurt more than the penalty. If you never applied, the FTA registers you from the date you first became liable. You then owe VAT on all taxable supplies and imports made before you were registered (Article 7). Say you never added VAT to your customers' invoices. That money now comes out of your own margin.
The English texts on tax.gov.ae and mof.gov.ae are not official translations. Where they differ, the Arabic text applies.
Voluntary registration from AED 187,500
You can register voluntarily once your taxable supplies, imports or taxable expenses reach AED 187,500 (VAT Executive Regulation, Article 8). The expenses test helps a company that spends a lot on getting started before it makes its first sale.
Why would you want to? A registered business can claim back the VAT it pays on business purchases. You need a valid tax invoice, and you must have paid the supplier or plan to (VAT Law, Article 55, as amended by Federal Decree-Law 16 of 2024). In return, you add the standard 5% to your taxable sales, file returns and keep proper records.
Who your customers are matters here. Businesses that are registered themselves can usually reclaim the 5% you charge them, so it costs them little. Private consumers can't reclaim it. For them, either your price goes up or your margin goes down.
Free zone companies and Designated Zones
A free zone is an area with its own authority that licenses companies under its own rules. Being licensed there does not take you out of VAT. Only a Designated Zone can be treated as outside the UAE for VAT purposes, only for goods, and only if it meets the conditions in Article 51 of the VAT Executive Regulation.
Those conditions cover security and customs controls on people and goods coming in and out, internal procedures for storing and handling goods, and an operator that follows FTA procedures. The area has to be fenced and meet all of them. Appearing on the list isn't enough (FTA VAT guide on Designated Zones, July 2018).
The list itself rests on Cabinet Decision 59 of 2017 and its later amendments. Guides quote different totals for how many zones are on it. Check your own zone against the current list on tax.gov.ae and confirm with the zone operator. Breaking the goods conditions in a Designated Zone costs AED 50,000 or 50% of the tax on the goods, whichever is higher (Cabinet Decision 40 of 2017 as amended, Table 3).
Your Corporate Tax position is decided by a different test. For the 0% rate available to free zone companies, see the Corporate Tax registration guide.
Registering through EmaraTax
EmaraTax is the FTA's online portal, and that's where you apply. To log in to FTA services you need UAE Pass, the national digital ID (FTA, October 2026). If you own the business alone and sell only within the UAE, you can often do this without help.
- Total your taxable supplies and imports for the last 12 months, add your forecast for the next 30 days, and write down the date you went over AED 375,000.
- Log in to EmaraTax with UAE Pass and start the VAT registration application.
- Have the trade licence, the owners' ID documents and your turnover figures ready. The portal tells you if it needs anything else.
- Submit within the 30 days. Keep the registration certificate and your Tax Registration Number (TRN) with your invoicing records.
The TRN is the number that goes on every tax invoice you issue. Online marketplaces may ask for it as well. noon, for example, asks VAT-registered sellers for the TRN and the dates on the VAT certificate, and sellers who aren't registered can pick a Non-VAT option (noon Seller Help Center, 2026). If you sell online, the e-commerce licence guide explains how this fits with your licence.
Most late registrations come down to a date nobody was watching. A founder believes the free zone licence takes care of VAT and passes the threshold without noticing. By the time they register, they face a penalty and the back VAT together.
Penalties and VAT deregistration
From 14 April 2026, penalties for VAT, excise and tax procedure breaches are set by the tables in Cabinet Decision 40 of 2017, as amended by Cabinet Decision 129 of 2025 (Ministry of Finance consolidated text, not an official translation). Corporate Tax has its own penalty rules, in Cabinet Decision 75 of 2023. The amounts a newly registered business is most likely to run into first are listed below, as of October 2026.
| Violation | Penalty | Basis |
|---|---|---|
| Late VAT registration | AED 10,000 | Table 1, row 3 |
| Late VAT return | AED 1,000, or AED 2,000 if repeated within 24 months | Table 1, row 8 |
| Late payment of VAT | A monthly penalty at 14% a year on the unpaid amount, for each month or part of a month | Table 1, row 9 |
| Late deregistration application | AED 1,000 a month, up to AED 10,000 | Table 1, row 4 |
| Tax invoice or credit note not issued on time | AED 2,500 for each case found | Table 3, rows 4 and 5 |
| Prices not shown including VAT | AED 5,000 | Table 3, row 1 |
Deregistration, which means cancelling your VAT registration, has its own deadlines. When you're required to deregister, the application is due within 20 business days of the event that triggers it (VAT Executive Regulation, Article 14(1)). The FTA says the service is free and that it reviews a complete application within 30 business days. The final return and payment are due no later than 28 days after deregistration takes effect. You only get the certificate once all tax and penalties are paid.
Returns, records and invoices
Once registered, you file a return on EmaraTax for every tax period. The deadline is the 28th day after the period ends. For the quarter ending 30 September 2026, that's 28 October 2026 (VAT Executive Regulation, Article 64).
Your tax invoices and credit notes have to follow the form the law sets out. Electronic invoicing is also coming in stages, under Ministerial Decisions 243 and 244 of 2025. On the current timetable, a company with revenue under AED 50 million must appoint an accredited service provider by 31 March 2027 and start e-invoicing by 1 July 2027. Before you buy accounting software, check your own date with the Ministry of Finance.
When a VAT adviser is worth it
Three situations are worth a short call with an adviser. Your turnover is close to AED 375,000 and you're not sure how to count back over the 12 months. Your free zone company sells goods out of a Designated Zone. Or the 30 days have already gone by. In that last case both the penalty and the back VAT are counted from the date you became liable, and you'll want the figures right before you apply.
If you're near the threshold, an accounting firm can do the look-back calculation for you. A bookkeeping service can keep the invoice records your returns depend on. To see where VAT comes in the wider setup process, read the guide to opening a company in Dubai step by step.
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