- What the thresholds are The Federal Tax Authority requires mandatory VAT registration when a business’s taxable supplies and imports exceed AED 375,000 in the past 12 months. Businesses may opt for voluntary registration when taxable supplies and imports exceed AED 187,500, or if qualifying expenses exceed that voluntary threshold1.
- Why it matters for startups Early voluntary registration can let startups reclaim input VAT on business purchases even before hitting the mandatory threshold, helping cash flow and input-tax recovery.
- Why it matters for foreign suppliers Non‑resident businesses making taxable supplies in the UAE must watch the thresholds closely because registration rules and compliance obligations can apply even if they lack a local establishment1.
- Special considerations for exempt supplies Businesses mainly making VAT‑exempt supplies may not benefit from registration since exempt outputs do not generate recoverable input VAT; voluntary registration is available but may not be advantageous for those whose supplies are largely exempt.
- Practical next steps
- Review your last 12 months of taxable supplies and imports.
- If close to AED 375,000, prepare to register and set up compliant invoicing and filing.
- If below mandatory but above AED 187,500, evaluate whether voluntary registration helps recover input VAT.
- Seek specialist advice for cross‑border supplies and exempt‑heavy business models.
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