Standing position, as published by the Federal Tax Authority.
What changed
Nothing has changed. This update exists because the thresholds are the most frequently misunderstood numbers in UAE tax, and because the misunderstanding is expensive.
The Federal Tax Authority publishes a mandatory registration threshold of AED 375,000 and a voluntary registration threshold of AED 187,500. The standard VAT rate is 5%.
Who is affected
Any business approaching either threshold, and in particular service businesses and e-commerce sellers whose revenue can move quickly between quarters.
What businesses should do
- Measure taxable supplies, not profit, and not invoices issued in a single good month.
- Look at the rolling position rather than the financial year, because the test does not wait for your year end.
- If you are close, register before you cross rather than after — late registration is the most avoidable penalty in the UAE system.
- If you incur significant recoverable input tax ahead of revenue, consider voluntary registration from AED 187,500 as a decision rather than a default.
- Confirm your assigned tax period on your FTA portal once registered; it is not always quarterly.
Registration is required once the mandatory threshold is exceeded. Your return filing window is assigned by the FTA and appears on your portal record.
Business implications
The commercial implication is pricing. A business that crosses the threshold and registers late often has to account for VAT on supplies it has already invoiced without it, which comes straight out of margin. Registering on time turns VAT into an administrative task; registering late turns it into a cost.
A practical example
A marketing consultancy bills AED 28,000 a month for most of the year, then lands two projects that take three consecutive months above AED 60,000. The rolling twelve-month figure crosses AED 375,000 in the second of those months. Nobody is watching a rolling figure, so it is noticed at year end — eight months and a large number of invoices later.
Questions this raises
Is the threshold based on profit or revenue?
Taxable supplies. A business can be comfortably below break-even and well above the threshold.
Should I register voluntarily?
It can be worth it where you incur recoverable input tax before revenue arrives. It also brings filing obligations, so it is a decision with two sides.
How often will I have to file?
The FTA assigns your tax period when you register and it appears on your portal record. Check it rather than assuming quarterly.
What happens if I registered late?
Administrative penalties apply, and in some circumstances a reconsideration is appropriate. Send us the notice and you will get a straight answer on whether it is worth challenging.
Official sources
A news article is a lead, not a source. These are the issuing authorities’ own publications:
This update is general information about UAE regulation as at the date shown. It is not tax, legal or accounting advice, and it does not take account of your circumstances. Regulations change and guidance is issued over time. Confirm your position with a qualified adviser, or contact Aizaa, before acting. Aizaa Management Consultancy is an independent consultancy and is not a government authority.
Published 1 September 2026. Last reviewed and updated 22 September 2026. This update is re-verified at least quarterly. If you believe anything here is out of date, tell us and we will publish a dated correction rather than editing silently.