AED 375,000 is the mandatory threshold for VAT registration in the UAE. If your taxable turnover exceeds this in the past 12 months or is expected to in the next 30 days, you’re required to register.
Whether you’re in the early stages of company setup in Dubai or already running operations, you can also opt in voluntarily once you hit AED 187,500 to start claiming input VAT early.
Late registration triggers a fixed penalty of AED 10,000. For late payment, penalties include 2% immediately, 4% after 7 days, and 1% daily starting from day 30, capped at 300% of the unpaid VAT.
Accurate, timely compliance isn’t optional—it’s essential to avoid steep penalties and maintain your business reputation and operations in the UAE.
What Foreign Entrepreneurs Need to Know ABOUT Tax & VAT Registration in Dubai?
If you’re coming to Dubai from abroad to start or run a company, you’re facing a mix of legal, financial, and language hurdles. VAT isn’t optional once you hit the threshold, and it interacts with customs duties, immigration, and corporate setup. You’ll need:
- A UAE‑registered company setup: Whether mainland, free zone, or offshore, it must be formally registered—each route links into VAT eligibility.
- An FTA Tax Registration Number (TRN): Essential for issuing compliant VAT invoices.
- A reliable accounting system: To track taxable and exempt sales, recover input VAT, and manage cash flows across refund cycles.
- Regular VAT filing: Submitted every quarter to the FTA, with potential fines for late or incorrect returns.
If these steps stress you out, you’re not alone. Foreign entrepreneurs, especially non-Arabic speakers, can struggle with VAT terminology, digital platforms, and compliance. That’s why having a connector—someone fluent in both FTA procedures and your business context—is not just helpful, it’s often the difference between compliance and costly penalties.
Thresholds and Timelines Table
| Metric | Value | What It Means |
| Mandatory VAT threshold | AED 375,000 | You must register within 30 days of exceeding this in taxable turnover. |
| Voluntary registration | AED 187,500 | You can register voluntarily—recommended for startups and small businesses. |
| VAT rate | 5% | Standard rate that applies to most goods and services across the UAE. |
| Filing frequency | Quarterly | Most businesses file every three months, unless otherwise instructed by FTA. |
| VAT return deadline | 28 days | Returns must be submitted within 28 days after the tax period ends. |
| Penalty for late filing | AED 1,000–2,000 | AED 1,000 for first offense, AED 2,000 for repeat within 24 months. |
| Penalty for late payment | Up to 300% of tax | 2% instantly + 4% after 7 days + 1% daily after 1 month (capped at 300%). |
Why a Qualified VAT & TAX Expert Helps You Do This Right؟
Handling VAT alone often leads to:
- Missed deadlines on TRN registration.
- Incorrect categorisation of supplies—some are zero-rated, exempt, or taxable.
- Misapplied reverse charges on imports.
- Poor documentation, triggering audits or penalties.
A qualified advisor, fluent in UAE tax law, fluent in English or your language, can:
- Assess your taxable activities and help decide whether voluntary registration makes sense.
- Prepare and file VAT returns correctly each quarter, with accurate input-output matching.
- Keep your accounting VAT-ready from day one, avoiding manual fixes later.
- Provide support during FTA audits, preparing reconciliations and responses.
- Advise on VAT planning—how to manage cash flow and reclaim input tax.
That’s where Nexus Partners steps in: We guide foreign founders through business setup (mainland, free zone, offshore), open bank accounts, help obtain visas, and take VAT off your plate.
Step‑by‑Step VAT & Tax Registration Path
- Set up your company
Choose mainland (DED), free zone, or offshore. Each route influences the VAT path. Mainland gives full UAE trade access; free zones provide 100% foreign ownership; offshore doesn’t trade within UAE, but still needs VAT if you import or make taxable supplies. - Track projected revenue
From the start, monitor cumulative taxable supply values. Crossing AED 375,000 triggers mandatory VAT registration; down to AED 187,500 gives a voluntary window. Keep this updated monthly. - VAT registration with FTA
Once triggered, register for TRN within 30 days. You’ll need details like license copy, passport, proof of address, MOA—your consultant helps prepare all documents. - Install your accounting system
Ensure it flags taxable/exempt sales, handles reverse-charge imports, and auto-fills VAT codes. Make sure each invoice matches FTA requirements. - Empower quarterly filing
VAT is usually filed quarterly in the UAE. Your advisor will prepare the return, ensure input VAT is properly claimed, and support you with compliant VAT practices, including deferred import VAT schemes where applicable. - Maintain ongoing compliance
Reconcile VAT balances monthly, respond quickly to FTA queries, and review your filings to avoid errors.
Important Tips
- Set up soon—even before reaching AED 187,500: Voluntary registration lets you reclaim input VAT early.
- Issue compliant invoices from day one: Each must show your company TRN, date, VAT amount, and total. Non‑compliant invoices aren’t deductible.
- Understand reverse‑charge on imports: VAT must be self‑declared and reclaimed; mishandled, it causes cash flow loss.
- File returns on time: Late filings or payments prompt fines, some up to AED 20,000, plus daily increments.
- Stay prepared for audits: The FTA monitors closely—keep 5‑year records, with backup for each transaction.
- Work with someone bilingual: FTA portals are in English/Arabic; your advisor should translate nuances and deadlines.
FAQs on Tax & VAT Registration in Dubai
Mandatory at AED 375,000 of taxable supplies/imports per year. But voluntary registration is wise once you hit AED 187,500 to start reclaiming input VAT.
FTA typically issues the TRN within 5–10 working days if documentation is complete. Registration must happen within 30 days of the threshold breach.
Input VAT on business purchases, imports, utilities, and rent can be reclaimed if properly invoiced and used for taxable supplies.
Yes, via the FTA portal—but you’ll need strong accounting skills and record‑keeping. Many foreign founders find it easier and safer to use a VAT specialist.
Yes. Mistakes such as late VAT filing or underpayment can result in fines, starting from AED 1,000 and increasing based on repeat offenses or payment delays. Additional percentage-based penalties apply for unpaid VAT, and audit findings can significantly increase these amounts, especially in cases of deliberate errors or poor record-keeping.
Why Choose Nexus Partners?
Nexus Partners is a UAE‑based business advisor offering full-service support to foreign entrepreneurs. From setting up mainland, free zone, or offshore companies, to registering for visas and opening bank accounts, we also manage your VAT and corporate tax needs. With in-house tax experts and fluency in FTA procedures, Nexus ensures your compliance is seamless, so you can focus on growing your business with confidence.
If you’re planning business in Dubai or the UAE and want VAT handled right from day one, reach out to Nexus Partners for a free consultation. Let a trusted expert take VAT off your plate—so you can focus on success.
Ready to simplify VAT registration and stay compliant in Dubai? Contact Nexus Partners today for expert support tailored to your business journey.