One Stop VAT Registration Threshold Calculation UAE

Federal Tax Authority had set some threshold limit to register a business entity for VAT registration. Only those companies who crossed that value are eligible for VAT registration. FTA had classified the ways of VAT registration into 2 ways. First one is “Mandatory Registration” with the threshold value of AED 375000. Second one is “Voluntary Registration” with the threshold value ranges between AED 187500 to AED 375000.

Taxable Turnover = Taxable Supplies + Zero-Rated Supplies Taxable Supplies: This refers to the value of all goods and services supplied within the UAE on which the standard VAT rate of 5% applies.

Zero-Rated Supplies: These are specific goods and services with a VAT rate of 0%. However, they are still included in the turnover calculation for VAT registration.

Exempt Supplies: Unlike the elements mentioned above, exempt supplies (e.g., education and healthcare services) are excluded from the calculation of taxable turnover for VAT registration.

For Example

Rose General Stores is a supermarket in the UAE that supplies groceries and all types of household products. They also import certain furniture products from other countries/regions and provide them to customers in the UAE.

Taxable Supplies (Groceries)

200000

Taxable Supplies (Door delivery charges)

25000

Zero-Rated Supplies

10000

Taxable Turnover = AED 200,000 (Groceries) + AED 25,000 (Door delivery charges) + AED 10,000 (Zero-Rated)

Taxable Turnover = AED 235,000

In this case, since the company's taxable turnover (AED 235,000) falls below the VAT registration threshold in the UAE, it doesn't need to register for VAT. However, it can register for VAT voluntarily since it is above AED 187,500.