How to Register for VAT in the UAE for a New Company

The United Arab Emirates introduced Value Added Tax (VAT) on January 1, 2018, at a standard rate of 5%. VAT is an indirect consumption tax applied on the supply of most goods and services, charged at each stage of the production and distribution chain. In a VAT system, businesses collect tax from their customers and remit it to the government, while claiming credits for VAT paid on their own purchases. The UAE adopted VAT (under Federal Decree-Law No. 8 of 2017) as part of a Gulf Cooperation Council (GCC) agreement to broaden revenue sources and diversify the economy away from oil.This move has played an important role in strengthening public finances and supporting the Economic Resilience of Dubai, ensuring the emirate can sustain growth while investing in infrastructure, innovation, and global competitiveness. In practice, VAT applies to all businesses (mainland, free zone, and offshore) that make taxable supplies in the UAE. In practice, VAT applies to all businesses (mainland, free zone, and offshore) that make taxable supplies in the UAE. This means most new companies – whether onshore or in a UAE free zone – must consider VAT from day one. Below is a detailed guide to help new UAE companies understand VAT registration requirements and complete the process via the official EmaraTax portal.

Who Needs to Register for VAT in the UAE

Any business (individual or legal entity) that makes taxable supplies in the UAE must register for VAT if it meets the relevant turnover thresholds. The key thresholds are:

• Mandatory registration: A UAE-resident business (mainland or free zone) must register if its taxable supplies and imports exceed AED 375,000 in the previous 12 months (or are expected to exceed that amount in the next 30 days..

• Voluntary registration: If taxable supplies (or certain expenses) are between AED 187,500 and AED 375,000 over the last 12 months (or expected in the next 30 days), a business may choose to register for VAT to recover input tax.

• Non-resident businesses: Any non-UAE-resident making taxable supplies in the UAE must register regardless of value (no threshold). For example, an offshore or foreign company selling goods or services in the UAE would need to register if it is the party responsible for the VAT.

In practice, this means new companies should immediately assess their sales forecasts. Even before the first AED 375,000 in turnover is reached, consider registering voluntarily if expenses or supplies exceed AED 187,500, as this allows you to reclaim VAT on business costs. Note that exempt supplies (like certain financial or residential leases) do not count toward the threshold. Also, each legal entity is treated separately for VAT (unless part of a tax group). As a rule of thumb: if you will sell or import goods/services in the UAE, keep a close eye on your turnover from the start.

Required Documents for VAT Registration

When you apply for VAT registration through the FTA’s EmaraTax portal, you must upload a set of supporting documents. The exact list depends on your business structure, but typically includes:

Company credentials: Certificate of Incorporation (or similar formation document), Memorandum/Articles of Association or Partnership Agreement, and the current Trade License (including any branch licenses) issued by the relevant UAE authority.

Identification: Passport copies and Emirates ID cards for all owners/partners and any authorized signatories. If the person applying is not named in the company’s founding documents, provide a notarized Power of Attorney authorizing them.

Financial/Operational proof: A stamped and signed declaration of taxable supplies – a written letter stating the company’s total taxable sales and imports from the date of establishment until the application date. This should be backed up with business records (invoices, purchase orders, contracts, sale agreements, etc.) that demonstrate the sales figures. If your application is based on expenses, include copies of at least five VAT invoices (from UAE suppliers) each above the registration threshold. You may also attach supporting documents for any projected revenues (e.g. signed contracts or purchase orders for the next 30 days).

Bank account details: A recent bank letter (on official letterhead) showing the company’s bank account and IBAN. For companies, the account must be in the company’s name. For sole proprietorships, a personal bank account is acceptable.

Address verification: A tenancy contract or title deed for the company’s physical address, and a utility bill or DEWA bill to confirm occupancy.

Other documents (as applicable): Customs registration code (if importing/exporting), and any special documents for clubs/charities or government entities (such as a Ministry of Finance or Emirates ID for government departments).

Gathering all these documents in advance will smooth the process. Be sure scans are clear and in PDF/DOC format (15 MB max each). Incomplete or illegible submissions are the main cause of delays. Keep digital copies ready because the FTA may request additional evidence during review.

Step-by-Step Guide to VAT Registration (EmaraTax)

VAT registration in the UAE is done entirely online through the Federal Tax Authority’s (FTA) EmaraTax portal. Follow these steps:

Sign up for an EmaraTax account. Go to the FTA website (www.tax.gov.ae) and select e-Services. Choose to create a new user (if you don’t have one). You can register using your email/mobile with password, or via UAE Pass (the national digital ID). Follow the instructions to verify your contact details.

Log in and create a Taxable Person Profile. After account activation, log in to EmaraTax and select “Create Taxpayer” or “New Taxable Person Profile.” Enter your business details (legal name, trade license number, business activities, address, etc.). Submit this profile for FTA verification. (This can take a few business days as the FTA cross-checks your information).

Access the Taxable Person dashboard. Once your profile is accepted, log in again and click View next to your new profile. This opens your FTA Taxpayer dashboard.

Start the VAT registration application. In your dashboard, go to Services > Register and select Value Added Tax. Choose “Mandatory” or “Voluntary” registration according to your situation. The portal will pre-fill some information from your profile. Carefully enter any additional details requested.

Complete the registration form. Fill out all sections of the VAT registration form in sequence. This includes confirming your business classification (LLC, branch, etc.), activities, and turnover. Provide financial figures: last 12 months’ taxable turnover (standard-rated, zero-rated, exempt) and any expected turnover or expenses. Specify if you have branches or overseas establishments. Fill in your bank account information (IBAN, bank name, etc.) and upload the documents gathered above (incorporation papers, license, IDs, declaration letter, invoices, etc.) under the “Attachments” section.

Review and submit. Carefully review all entries for accuracy. Errors in financial amounts or activities can delay approval. Once satisfied, submit the application. You will receive an application reference number for tracking.

This online process is available 24/7 and typically takes about 45 minutes of active time to fill out the application. Once submitted, the FTA will review it. Complete applications are usually processed within 20 business days. Make sure to log back into EmaraTax after a few weeks to check for approval or any follow-up questions from the FTA.

After Registration: TRN Issuance, VAT Returns, and Compliance

If your VAT registration is approved, you will receive a Tax Registration Number (TRN). The FTA will post your VAT registration certificate (with the TRN) to your EmaraTax dashboard. You can download or view this certificate at any time. Keep this TRN safe – it must appear on all tax invoices and correspondence.

Once registered, you are a VAT-registered business and must comply with all VAT obligations:

• Issuing Invoices: Charge VAT at 5% on all standard-rated supplies. Issue valid tax invoices to customers for each taxable sale. (Electronic invoicing rules are being phased in, but paper/electronic invoices are required now for taxable sales).

• Claiming Input VAT: You may generally reclaim (“credit”) the VAT you paid on business inputs (purchases) against the VAT you collect on sales, subject to usual rules. Keep all purchase invoices for at least 5 years.

• Filing VAT Returns: Most businesses file quarterly VAT returns (Form VAT201) unless the FTA assigns monthly filing. By default the FTA assigns quarterly filing cycles, unless your turnover is very high. In practice, companies with annual revenue above AED 150 million are often required to file monthly; others remain on quarterly cycles. Regardless, each return is due within 28 days of the end of the tax period. For example, if your tax period is Jan–Mar, your return and any payment are due by April 28. All returns and payments are submitted online via EmaraTax. After each filing, you must pay any net VAT due by the same deadline.

• Record-Keeping: Maintain full accounting and VAT records (invoices, contracts, import documents, etc.) for at least five years. You may need these in case of FTA audits or to support your VAT filings.

The VAT return process essentially computes Output VAT (VAT charged on sales) minus Input VAT (VAT paid on purchases). If output > input, you pay the difference to the FTA. If input > output, you may claim a refund (via your VAT return). The first VAT return due after registration will cover the next full tax period. Ensure your accounting is ready to distinguish taxable vs exempt activity from the moment you register.

Free Zones and Designated Zones: Special Rules

UAE free zones have unique VAT treatments. In general, a business located in a free zone follows the same VAT rules and registration thresholds as any other company – supply VAT on sales into the UAE mainland, reclaim VAT on business purchases, etc. However, some free zones are officially Designated Zones under UAE VAT law. Designated Zones (e.g. Jebel Ali Free Zone, Khalifa Industrial Zone, ADGM, etc.) are treated as being outside UAE VAT territory for the movement of goods.

• Within or between designated zones: Supplies of goods moving solely within one Designated Zone, or between two designated zones, are usually outside the scope of UAE VAT (effectively VAT-exempt). This means if your company is in a designated zone and you sell goods to another entity in the same (or another) designated zone, no 5% VAT is charged, provided all formal requirements are met.

• Inbound/outbound to UAE: Goods brought into a designated zone from the UAE mainland (or another country) are generally treated as exports (0% if moved to the zone). Conversely, goods leaving a designated zone for the UAE mainland are treated as imports and subject to 5% VAT at the border. In other words, moving goods into or out of a designated zone triggers the normal import/export VAT rules.

For VAT registration purposes, a business in a designated zone must still register if it makes taxable supplies outside the zone (in the UAE mainland or a non-designated zone) that exceed the thresholds. Transactions confined within designated zones generally do not count as UAE supplies. Free-zone companies that deal with mainland customers should treat those sales as normal taxable supplies to the UAE.

Additionally, if your free zone company meets the criteria to be a “Qualifying Free Zone Person” (meeting certain substance and licensing conditions), you may zero-rate supplies of goods to the UAE mainland (treat them as exports) under UAE VAT law. This is a complex area – consult a VAT advisor to check if your free-zone business can benefit from zero-rating on intra-UAE exports under the QFZP rules.

In summary: Don’t assume a free zone location exempts you from VAT obligations. If you make any supplies to UAE customers or import goods for use in the UAE, VAT rules apply. Always check whether your specific free zone is “designated” and handle VAT on stock movements accordingly.

Penalties for Late Registration and Non-Compliance

UAE VAT law imposes strict penalties for missing deadlines or providing incorrect information. Key penalties include:

• Late registration: If you are required to register and fail to submit your application within 30 days of meeting the threshold, you incur an administrative fine. Under Cabinet Decision No. 49/2021, this late-registration penalty is AED 10,000. (Previously it was AED 20,000, but was reduced in 2021). For example, if a new company’s taxable sales exceed AED 375k and it delays registering for VAT, a flat AED 10k fine applies.

• Late filing of VAT return: Returns must be filed on time each period. Failure to file by the deadline triggers a fine of AED 1,000 for the first offense, increasing to AED 2,000 for subsequent breaches (within 24 months).This penalty applies each time you miss a filing deadline.

• Late payment of VAT: If you file on time but pay late, penalties accrue. Immediately after the due date, a penalty of 2% of the unpaid tax is added, and then a further 4% of the remaining unpaid tax for each month or part of a month thereafter. These rates are capped at a maximum of 300% of the original unpaid tax.

• Other non-compliance: There are additional fines for various violations. For example, failing to issue a tax invoice can cost AED 5,000 (per missing invoice), and not keeping proper VAT records can incur an initial AED 10,000 fine. Providing incorrect VAT information to the FTA (on registration or returns) carries penalties starting at AED 3,000.

In short, timeliness and accuracy are critical. To avoid penalties, register within 30 days of hitting the threshold, file all VAT returns (and pay any VAT due) by each deadline, and ensure all information and documentation are correct. Setting reminders for filing dates and keeping good records will help new companies maintain compliance and avoid costly fines.

Conclusion

Registering a new company for VAT in the UAE is a multi-step process but essential for legal compliance. In summary: determine if your business meets the VAT turnover thresholds; gather the required documents (business licenses, IDs, financial proofs, etc.); create an EmaraTax account and taxable person profile; submit the VAT registration form online following the steps above; and wait for FTA approval (typically ~20 business days). Once registered, you’ll receive a TRN and must begin charging VAT on sales and filing returns on schedule.

New companies should pay special attention to free-zone status (ordinary vs. designated) as it affects VAT treatment. Above all, ensure timely compliance: late registration or late filings attract heavy fines (e.g. AED 10,000 for missing the registration deadline). By following the official EmaraTax procedures and staying organized with documentation, a new business can smoothly register for VAT in the UAE and enjoy the benefits of compliance (such as reclaiming input VAT).