What is the VAT registration threshold in the UAE?
AED 375,000. Article 7 of the Executive Regulation of the VAT Decree-Law sets the mandatory registration threshold at AED 375,000 of taxable supplies, and Article 8 sets the voluntary threshold at AED 187,500. A business required to register must apply to the Federal Tax Authority within 30 days.
Late registration
If a business does not apply when required, the Authority registers it from the date it first became liable and imposes penalties under the Tax Procedures Law. For a contractor, that can mean accounting for VAT on certificates already invoiced without VAT.
Voluntary registration
Between AED 187,500 and AED 375,000 a business may register voluntarily. Registration takes effect from the first day of the month after the application, or an earlier date the Authority agrees. Subcontractors often register early because main contractors prefer suppliers who can issue tax invoices.
How SupaJack Construct handles VAT
Each organisation's TRN is set once. Progress invoices, supplier bills and credit notes then carry the 5% VAT on the correct base and feed the VAT return figures, so the business sees its taxable turnover at any time.
Related tools and guides
See the VAT guide for contractors, the VAT calculator, the payment certificate calculator, the retention calculator, finance and VAT in SupaJack Construct, the answer on whether a payment certificate triggers VAT and the meaning of e-invoicing.
Worked example
A new fit-out subcontractor certifies AED 120,000, AED 140,000 and AED 130,000 of work in its first three months, AED 390,000 in total. It has passed AED 375,000 and must apply for registration within 30 days.
Questions people ask
Is the threshold based on profit or turnover?
On the value of taxable supplies, not profit.
How long is there to apply?
30 days from becoming required to register.
Can a small subcontractor register early?
Yes, from AED 187,500 of supplies or expenses.