What is the mandatory VAT registration threshold?

Article 1 - Definitions1 In the application of the provisions of this Decree-Law, the following words and expressions shall have the meanings assigned against each, unless the context otherwise requires: State Minister Authority Value Added Tax : : : : Tax GCC States : : Implementing States : Goods : Services Import : : United Arab Emirates. Minister of Finance. Federal Tax Authority. A tax imposed on the Import and supply of Goods and Services at each stage of production and distribution, including the Deemed Supply. Value Added Tax (VAT). All countries that enjoy full membership of the Cooperation Council for the Arab States of the Gulf pursuant to its Charter. The GCC States that are implementing a Tax law pursuant to an issued legislation, and as specified in the Executive Regulation of this Decree-Law. Physical property that can be supplied including real estate, water, and all forms of energy as specified in the Executive Regulation of this Decree-Law. Anything that can be supplied other than Goods. The arrival of Goods from abroad into the territory of the State or receipt of Services from outside the State. 1 Article amended as per Federal Decree-Law No. 18 of 2022. Federal Decree-Law No. 8 of 2017 and its amendments – As published by the Ministry of Finance 2 Concerned Goods Concerned Services Person Taxable Person Taxpayer Tax Registration Tax Registration Number (TRN) Registrant Recipient of Goods Recipient of Services Importer Taxable Trader Tax Return Consideration Business Exempt Supply : Goods that have been imported, and would not be exempt if supplied in the State. : Services that have been imported, where the place of supply is considered to be in the State, and would not be exempt if supplied in the State. : A natural or legal person. : Any Person registered or obligated to register for Tax purposes under this Decree-Law. : Any Person obligated to pay Tax in the State under this Decree-Law, whether a Taxable Person or end consumer. : A procedure whereby the Taxable Person or his Legal Representative registers with the Authority for Tax purposes. : A unique number issued by the Authority for each Person registered for Tax purposes. : The Taxable Person who has been issued with a TRN. : Person to whom Goods are supplied or imported. : Person to whom Services are supplied or imported. : With respect to importing Goods, it is the Person whose name appears for customs clearance purposes as the importer of the Goods on the date of Import. With respect to Services, it is the Recipient of these Services. : A Taxable Person in the Implementing States, whose main activity is the distribution of water and all types of energy as specified in the Executive Regulation of this Decree-Law. : Information and data specified for Tax purposes and submitted by a Taxable Person in accordance with a form prepared by the Authority. : All that is received or expected to be received for the supply of Goods or Services, whether in money or other acceptable forms of payment. : Any activity conducted regularly, on an ongoing basis and independently by any Person, in any location, such as industrial, commercial, agricultural, professional, vocational, service or excavation activities or anything related to the use of tangible or intangible properties. : A supply of Goods or Services for Consideration while conducting Business in the State, where no Tax is Federal Decree-Law No. 8 of 2017 and its amendments – As published by the Ministry of Finance 3 Taxable Supply : Deemed Supply : Input Tax : Output Tax : Recoverable Tax : Due Tax : Payable Tax Tax Period : : Tax Invoice2 : Tax Credit Note3 : Government Entities : Charities : imposed and the Input Tax related thereto is not recovered, except according to the provisions of this Decree-Law. A supply of Goods or Services for Consideration during the course of Business by any Person in the State, and does not include Exempt Supply. All that is considered as a supply and treated as a Taxable Supply according to the instances stipulated in this Decree-Law. Tax paid by a Person or due from him when Goods or Services are supplied to him, or when conducting an Import. Tax charged on a Taxable Supply and any supply considered as a Taxable Supply. Amounts that have been paid and that the Authority may return to the Taxpayer pursuant to the provisions of this Decree-Law. Tax that is calculated and imposed pursuant to this Decree-Law. Tax that is due for payment to the Authority. A specific period of time for which the Payable Tax shall be calculated and paid. A written or electronic document in which any Taxable Supply and its details are recorded, including an Electronic Invoice, as the case may be. A written or electronic document in which any amendment to reduce or cancel a Taxable Supply and its details are recorded, including an Electronic Credit Note, as the case may be. Ministries, government departments and agencies, authorities and public institutions in the State, whether Federal or local, or any other entities treated with the treatment decided for Government Entities, in accordance with the decisions issued by the Cabinet for the purposes of implementing the provisions of this Decree-Law. Societies and associations of public welfare not aiming to make a profit that are listed within a Cabinet Decision issued at the suggestion of the Minister. 2 Definition amended as per Federal Decree-Law No. 16 of 2024. 3 Definition amended as per Federal Decree-Law No. 16 of 2024. Federal Decree-Law No. 8 of 2017 and its amendments – As published by the Ministry of Finance 4 Relevant Charitable Activity : An activity for the purpose other than profit or benefit to any proprietor, member, or shareholder of the Charity, which is undertaken by the Charity in the course or furtherance of its charitable purposes or objectives to carry out a charitable activity in the State as approved by the competent authorities, or under the conditions of its establishment as a Charity under Federal or Emirate legislation, decree or decision, or as otherwise licensed to conduct a charitable activity by an entity that grants such licences on behalf of the Federal or Emirate Government. Mandatory Registration : An amount specified in the Executive Regulation of this Threshold Decree-Law; if exceeded by the value of Taxable Supplies or is anticipated to be exceeded, the supplier shall apply for Tax Registration. Voluntary Registration : An amount specified in the Executive Regulation of this Threshold: Decree-Law; if exceeded by the value of Taxable Supplies or taxable expenses or is anticipated to be exceeded, the supplier may apply for Tax Registration. Transport-related : Shipment, packaging and securing cargo, preparation Services of Customs documents, container management, loading, unloading, storing and moving of Goods, or any other closely related Services or that are necessary to conduct the transportation Services. Place of Establishment : The place where a Business is legally established in a country pursuant to the decision of establishment, in which significant management decisions are taken or central management functions are conducted. Fixed Establishment : Any fixed place of Business, other than the Place of Establishment, in which the Person conducts his Business regularly or permanently and where sufficient human and technology resources exist to enable the Person to supply or acquire Goods or Services, including the Person’s branches. Place of Residence : The place where a Person has a Place of Establishment or Fixed Establishment, in accordance with the provisions of this Decree-Law. 4 Non-Resident : Any Person who does not have a Place of Establishment or Fixed Establishment in the State and usually does not reside in the State. 4 Definition amended as per Federal Decree-Law No. 16 of 2024. Federal Decree-Law No. 8 of 2017 and its amendments – As published by the Ministry of Finance 5 Related Parties : Two or more Persons, not separated on the economic, financial or regulatory level, where one can control the others either by Law, or through the acquisition of shares or voting rights. Customs Legislation : Federal and local legislation that regulate customs in the State. Designated Zone : Any area specified by a Cabinet Decision issued at the suggestion of the Minister, as a Designated Zone for the purpose of this Decree-Law. Export : Goods departing the State, or the provision of Services to a Person whose Place of Establishment or Fixed Establishment is outside the State. Voucher : Any instrument that gives the right to receive Goods or Services against the value stated thereon or the right to receive a discount on the price of the Goods or Services. Vouchers do not include postage stamps issued by the Emirates Post Group. Activities conducted : Activities conducted by Government Entities in their with Sovereign Capacity sole competent capacity, with or without Consideration. Capital Assets : Business assets designated for long-term use. Capital Assets Scheme : A scheme whereby the initially recovered Input Tax is adjusted based on the actual use during a specific period. Administrative : Amounts imposed upon a Person by the Authority for Penalties violating the provisions of this Decree-Law and the Tax Procedures Law. Administrative : A decision issued by the Authority in relation to the Penalties Assessment Administrative Penalties due. Excise Tax : A tax imposed by law on specific Goods. Tax Group : Two or more Persons registered with the Authority for Tax purposes as a single Taxable Person in accordance with the provisions of this Decree-Law. Pure Hydrocarbons : Any of the various pure compounds of the chemical formula consisting solely of hydrogen and carbon (CxHY). Tax Evasion : The Person’s use of illegal means, resulting in the reduction of the amount of the Due Tax, non-payment thereof, or a refund of Tax that the Person did not have the right to have refunded. Federal Decree-Law No. 8 of 2017 and its amendments – As published by the Ministry of Finance 6 Tax Audit : A procedure undertaken by the Authority to inspect the commercial records or any information, data or Goods related to a Person to verify the fulfilment of its obligations in accordance with the provisions of this Decree-Law or the Tax Procedures Law. Tax Assessment : Shall mean the Tax Assessment as defined in the Tax Procedures Law. Voluntary Disclosure : A form prepared by the Authority pursuant to which the Taxpayer notifies the Authority of any error or omission in the Tax Return, Tax Assessment or Tax refund application in accordance with the provisions of the Tax Procedures Law. Tax Procedures Law : Federal Law No. 7 of 2017 on Tax Procedures and its amendments, and any other Federal law replacing it. Electronic Invoicing : An electronic system designated for the issuance, 5 System transmission, exchange and sharing of invoice and credit note data, in accordance with legislation governing tax procedures. 6 Electronic Invoice : An invoice issued, transmitted, and received in a structured electronic format that enables automatic and electronic processing, in accordance with the Electronic Invoicing System. 7 Electronic Credit Note : A credit note issued, transmitted, and received in a structured electronic format, that enables automatic and electronic processing, in accordance with the Electronic Invoicing System. Title Two – Tax Scope and Rate

Article 7 – Mandatory Registration 8 1. The Mandatory Registration Threshold shall be AED 375,000 (three hundred and seventy-five thousand dirhams). 2. The Person required to register for Tax pursuant to the provisions of the DecreeLaw must file a Tax Registration application with the Authority within 30 (thirty) days of being required to register. 3. Where a Person does not file his Tax Registration application despite being required to, the Authority shall register that Person with effect from the date on which the Person first became liable to be registered for Tax and impose the necessary penalties in accordance with the Tax Procedures Law. 4. Where supplies made by a Person exceed, in accordance with the Decree-Law, the Mandatory Registration Threshold during the previous 12-month period, the Authority shall register the Person with effect from the first day of the month following the month in which the Person is required to register, whether or not he applies for Tax Registration, or from such earlier date as agreed between the Authority and the Person. 5. Where a Person expects that his supplies, in accordance with the Decree-Law, will exceed the Mandatory Registration Threshold during the next 30 (thirty) days, the Authority shall register him with effect from the date on which there are 8 Article amended as per Cabinet Decision No. 100 of 2024. Cabinet Decision No. 52 of 2017 and its amendments – As published by the Ministry of Finance 6 reasonable grounds for believing the Person will be required to register for Tax as specified in this Clause, whether or not he so notifies them of the liability to register for Tax, or from such earlier date as agreed between the Authority and the Person. 6. Where a Person is not a resident of the State and is required to register for Tax in accordance with the provisions of the Decree-Law, the Authority shall register him with effect from the date on which he started making supplies in the State, whether or not he so notifies them of the liability to register for Tax, or from such earlier date as agreed between the Authority and the Person. 7. A Taxable Person who has been late in registering for Tax according to the provisions of this Article is liable to account for and pay to the Authority the Due Tax on all Taxable Supplies and Imports made by him before registering.

A person would have a place of residence in the UAE for the purposes of VAT registration if the person has a place of establishment or fixed establishment in the UAE. The terms are defined in the Decree-Law:4 • “Place of Establishment” is the place where a business is legally established in a country pursuant to the decision of its establishment, in which significant management decisions are taken or central management functions are conducted. • “Fixed Establishment” is any fixed place of business, other than the Place of Establishment, in which the person conducts his business regularly or permanently and where sufficient human and technology resources exist to enable the person to supply or acquire goods or services, including the person’s branches. Further details regarding requirements for mandatory and voluntary registrations are provided below. 2.4.1. Mandatory registration A person resident in the UAE is required to register for VAT if any of the following apply:5 • • the total value of their taxable supplies made within the UAE and imports into the UAE exceeded AED 375,000 over the previous 12-month period; or the person anticipates that the total value of their taxable supplies made within the UAE and imports into the UAE will exceed AED 375,000 in the next 30 days. The main categories of supplies and imports that need to be taken into account for the purposes of the mandatory registration threshold, and the voluntary registration threshold (discussed in Part 2.4.2 below), are:6 • • Supplies of goods or services made in the UAE in the course of business. Any goods or services that the person has imported into the UAE that would have been subject to VAT had they been supplied in the UAE. The person should not include in this calculation the value of any supplies which are either exempt from VAT or are outside the scope of UAE VAT. In contrast, if the person is not resident in the UAE, the person is required to register for VAT if it makes any taxable supplies in the UAE, unless there is another person in the UAE who is responsible for accounting for VAT on such activities. As such, for non-resident suppliers, the registration threshold is, in effect, nil. 4 Article 1 of the Decree-Law. Article 13 of the Decree-Law and Article 7 of the Executive Regulation. 6 Article 19 of the Decree-Law. 5 6

imports in the UAE, unless there is another person in the UAE who is responsible for accounting for VAT on such activities. The main categories of supplies and imports that need to be taken into account for the purposes of VAT registration thresholds are: 1. Supplies of goods or services made in the UAE in the course of business. 2. Any goods or services that the person has imported into the UAE that would have been subject to VAT had they been supplied in the UAE. The person should not include the value of any supplies which are exempt from VAT in this calculation. The person should also not include the value of any one-off supply of a capital asset when calculating the total value of taxable supplies for VAT registration purposes. Example 2 On 15 January, ABC LLC, a business resident in the UAE, made AED 275,000 of taxable supplies and AED 135,000 of exempt supplies in the previous 12month period. Since the total value of their taxable supplies is less than the Mandatory Registration Threshold, they would not be obliged to become VAT registered. On 20 January ABC LLC sold additional AED 200,000 of taxable supplies. As the combined value of their taxable supplies in the previous 12-month period exceeds the Mandatory Registration Threshold, ABC LLC is required to register for VAT. ABC LLC exceeds the Mandatory Registration Threshold of AED 375,000 and they would be required to notify the FTA of their requirement to register for VAT. Example 3 On 1 March, XYZ LLC, a business resident in the UAE, is not required to register for VAT since the value of their supplies and imports over the previous 12-month period does not exceed the registration threshold. On 1 March, they enter into a contract to provide AED 5,000,000 of taxable supplies on 15 March. As XYZ LLC expects to receive supplies in excess of the Mandatory Registration Threshold within the next 30 days, they have an obligation to notify the FTA of their requirement to register for VAT. 12 VAT Guide | Taxable Person | VATG001