VAT Registration : Who should register for VAT?

Tally Solutions | Updated on: December 30, 2021

Mandatory VAT Registration in UAE
Voluntary VAT Registration in UAE
VAT Registration Exemption

Mandatory VAT Registration in UAE

All the businesses who have a place of residence in the state of UAE and whose value of supplies in the member states in previous 12 months has exceeded AED 375,000 should mandatorily register under UAE VAT. Also, if the businesses anticipate that the total value of supplies will exceed the mandatory registration threshold of AED 375,000 in the next 30 days, then they too will have to register under UAE VAT.

Those businesses, who do not have a place of residence in the state of UAE, will have to compulsorily register under VAT irrespective of the registration threshold.

Mandatory Registration
Type of Business	Registration Threshold Conditions
Resident	Value of Supplies exceeds AED 375,000	In Previous 12 Months
Resident	Value of Supplies exceeds AED 375,000	Anticipated to exceed in next 30 days during the current financial year
Non Resident	Threshold limit is not applicable	Compulsorily registration under VAT irrespective of threshold

Voluntary VAT Registration in UAE

All the businesses having a place of residence in the state of UAE who are not required to mandatorily register under VAT, are given an option to voluntarily apply for VAT registration.This can be done, only if the annual supplies or taxable expenses incurred is not less than voluntary registration threshÂ¬old. The Voluntary Registration Threshold is AED 187,500 which is 50% of the mandatory registration threshold.

Voluntary VAT Registration in UAE
Value of Supplies/ Taxable Expenses exceeds AED 187,500	In Previous 12 Months
Value of Supplies/ Taxable Expenses exceeds AED 187,500	Anticipated to exceed in next 30 days during the current financial year

Here, the registrations are not mandatory, it is optional for business to decide whether they would want to register. The inclusion of taxable expenses as criteria to determine the eligibility for voluntary registration provides an opportunity for all the start-up business to register under UAE VAT. This is because, as a start-up, the turnover or value of supplies may be lesser but there is a high possibility that huge amount of taxable expenses would have been incurred in starting the business or during the initial stage of the business. As a result, the inclusion of taxable expenses as a criteria for voluntary registration would enable all the start-up business to register with zero turnover.

VAT Registration Exemption

The businesses whose value of supplies in the member states is below the voluntary registration threshold of AED 187,500 are not allowed to register under UAE VAT. Also, the businesses who are engaged in making only zero-rated supplies may request for VAT registration exemptions.