Criteria for registering for VAT

A business must register for VAT if its taxable supplies and imports or taxable expenses exceeds AED 375,000 during last 12 months.

It is optional for businesses whose taxable supplies and imports or taxable expenses exceed AED 187,500 but do not exceed AED 375,000 during last 12 months.

Taxable supplies: For the purposes of understanding whether a registration obligation exists, a taxable supply refers to a supply of goods or services made by a business in the UAE that may be taxed at a rate of either 5% or 0%. Imports are also taken into consideration for this purpose, if a supply of such goods or services would be taxable if made within the UAE.

A business house pays the government the tax that it collects from the customers, but at the same time it receives a refund from the government on tax that it has paid to its suppliers in the form of adjustment against tax collected from customers.

Foreign businesses may also recover the VAT they incur when visiting the UAE.

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