There’s a conversation we end up having almost every week. A founder, about six months into trading, asks us: “We’ve already registered for corporate tax. Doesn’t that mean we’re registered for VAT too?”
It doesn’t. They’re two completely separate registrations, triggered by two completely different things. Corporate tax registration applies to almost every company, whatever its revenue. VAT registration depends on how much you sell.
So the question that actually matters is this: when does your new company cross the line? Below we’ve laid out the UAE VAT registration thresholds for 2026 in plain numbers, the two tests that trigger them, and what’s changed in the VAT rules this year.
The two numbers you need to know
There are two VAT thresholds, and neither one has changed in 2026.
| Threshold | Amount (AED) | What it means for you |
| Mandatory registration | 375,000 | You have to register and start charging 5% VAT |
| Voluntary registration | 187,500 | You can register if you want to |
| Below the voluntary threshold | Under 187,500 | As a resident business, you can’t register |
The standard VAT rate is still 5%.
The two tests that make registration mandatory
You have to register for VAT once either of these is true.
The look-back test. Your taxable supplies and imports went over AED 375,000 in the previous 12 months.
The look-forward test. You expect your taxable supplies and imports to go over AED 375,000 in the next 30 days.
As soon as you meet either test, you’ve got 30 days to apply through EmaraTax. Apply late and you’re looking at an AED 10,000 penalty.
One thing people often miss: the look-back test runs on a rolling 12 months, not the calendar year. What you billed in March 2026 still counts when you’re checking your numbers in February 2027.
Let’s walk through an example
Picture a consulting company billing a steady AED 35,000 a month, all of it standard-rated.
| Month of trading | Total taxable supplies so far (AED) | Where they stand |
| 5 | 175,000 | Below both thresholds |
| 6 | 210,000 | Past the voluntary threshold, so they can register if they want |
| 10 | 350,000 | Still under the mandatory threshold |
| 11 | 385,000 | Mandatory threshold crossed, and the 30-day clock starts |
Now imagine that same company lands a single AED 400,000 project in month four, to be invoiced within the next 30 days. That meets the look-forward test straight away. They need to register now, not in month eleven.
What actually counts towards the threshold
This is where a lot of founders get their numbers wrong. The threshold is based on taxable supplies and imports, not on total revenue.
Standard-rated supplies (the ones at 5%) count. So do zero-rated supplies, such as many exports, and relevant imports.
Exempt supplies don’t count. That includes things like certain financial services, residential property leases and bare land. Supplies that fall outside the scope of UAE VAT don’t count either.
So a company with a lot of exempt income can stay under the line even with high revenue. And a company with fairly modest sales but heavy imports can cross it much sooner than expected.
When voluntary registration makes sense
The voluntary threshold has one feature the mandatory one doesn’t: you can meet it based on your taxable expenses, not just your sales. That makes it really useful for businesses that are spending a lot before they start earning.
| It’s worth considering if | Think twice if |
| You’ve got big set-up costs with 5% VAT on them, like fit-out or equipment | Most of your customers are consumers who can’t reclaim VAT |
| Your clients are VAT-registered businesses who’ll reclaim the VAT you charge | You’re not ready to file returns and keep proper VAT records |
| You want to come across as established to corporate clients | There’s a chance you’ll drop below AED 187,500 soon |
Just keep in mind that if you register voluntarily, you can’t deregister in your first 12 months. Make the decision with a full year in view.
Free zone and non-resident companies
Free zone companies work with the same AED 375,000 and AED 187,500 thresholds. Companies in Designated Zones, like JAFZA, have their own specific VAT rules for goods moving within and between those zones.
Non-resident businesses making taxable supplies in the UAE generally don’t get a threshold at all. They may need to register from their very first taxable supply.
What changed in UAE VAT in 2026
The thresholds stayed put, but quite a bit moved around them. Federal Decree-Law No. 16 of 2025 amended the VAT Law from 1 January 2026, and the penalty rules changed in April.
| What changed | From | What it means for a new company |
| No more self-invoicing under the reverse charge | 1 January 2026 | Less paperwork on imported services and goods |
| A five-year limit on excess input tax | 1 January 2026 | Refunds and credits have to be claimed within five years |
| The FTA can deny input tax linked to evasion | 1 January 2026 | Make sure your suppliers are genuine and properly registered |
| A 14% per annum late payment penalty | 14 April 2026 | Replaces the older percentage-based structure, under Cabinet Decision No. 129 of 2025 |
E-invoicing is the other one to keep an eye on. A voluntary pilot opened in July 2026, and it becomes mandatory from 1 January 2027 for businesses with revenue of AED 50 million or more. Most new companies will fall into the next phase, though, which goes live on 1 July 2027 for businesses below AED 50 million, with an accredited service provider to be appointed by 31 March 2027. If you’re registering for VAT now, it’s worth choosing accounting software that’s ready for it.
Once you’re registered
Getting your tax registration number is the beginning, not the end. From there, you’ll need to show your TRN on tax invoices and charge 5% VAT on taxable supplies. You’ll file VAT returns for each tax period, usually quarterly, by the 28th day after the period ends. You’ll need records that link every return back to your books.
And keep watching your 12-month total. If your supplies stay below AED 187,500 for 12 months in a row, you have to apply to deregister within 20 business days.
A good habit for growing companies
Check your rolling 12-month taxable supplies every month, and look at your pipeline every time you sign a big contract. It takes about ten minutes. It’s also the easiest way to avoid an AED 10,000 penalty for something you’d have done anyway.
When to come and talk to us
If you’re somewhere between AED 150,000 and AED 375,000 and you’re not sure which side of the line you’re on, that’s exactly when to have a conversation. Our tax team handles VAT and corporate tax registration, returns and bookkeeping, both for companies we’ve set up and plenty we haven’t.
If you’d like to sit down with us in person, we’re at Offices 3701 to 3702, Citadel Tower, Business Bay.
The answer in a nutshell
Your new company has to register for VAT once its taxable supplies and imports go over AED 375,000 in the previous 12 months, or are expected to in the next 30 days. From that point, you have 30 days to apply. If you’re over AED 187,500, counting expenses, you can register voluntarily if it helps your business. And corporate tax registration is a completely separate obligation.
Sources: The National on the 2026 VAT amendments · KPMG on Federal Decree-Laws 16 and 17 of 2025 · DLA Piper on VAT changes from 1 January 2026
Questions founders ask us
What’s the UAE VAT registration threshold in 2026?
AED 375,000 for mandatory registration and AED 187,500 for voluntary registration. Neither changed this year.
How long do I have to register after crossing AED 375,000?
30 days. Applying late means an AED 10,000 penalty.
Does all my revenue count towards the threshold?
No. Only taxable supplies and imports count. Exempt and out-of-scope supplies are left out.
Can a new company register before it starts earning?
Yes. If its taxable expenses go over AED 187,500, it can register voluntarily.
Is VAT registration the same as corporate tax registration?
No. They’re separate registrations, each with their own rules, deadlines and penalties.
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