VAT Registration for a New UAE Company (and How It Differs from Corporate Tax)
A new UAE company faces two separate federal taxes with two separate registrations, and founders routinely blur them into one. Value Added Tax (VAT) is a tax on transactions — what you sell — and it has a turnover threshold you may or may not cross. Corporate Tax is a tax on profit — what you keep — and it follows a different law with different rules. This guide explains when a new company must register for VAT, when it may register voluntarily, the exact thresholds the Federal Tax Authority applies, how the whole thing differs from corporate tax registration, and how to complete VAT registration on the EmaraTax portal to obtain a Tax Registration Number (TRN). It is general information to help you plan, not tax advice on your specific accounts.
- VAT registration becomes mandatory once taxable supplies and imports exceed AED 375,000
- Voluntary registration opens at AED 187,500 of taxable supplies, imports or expenses
- VAT is a tax on transactions; corporate tax is a separate tax on profit under a different law
- Both registrations run on the FTA EmaraTax portal, each issuing its own TRN
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When a new company must register for VAT, in one paragraph
A new UAE company must register for VAT once the value of its taxable supplies and imports over the previous twelve months exceeds AED 375,000, or once it expects to exceed that figure within the next thirty days. Below that line, it may register voluntarily if its taxable supplies, imports or even its taxable expenses exceed AED 187,500. Registration is done through the Federal Tax Authority's EmaraTax portal, which issues a Tax Registration Number (TRN). This is entirely separate from corporate tax: VAT is charged on transactions at a standard rate of 5% under Federal Decree-Law No. 8 of 2017, while corporate tax is charged on profit under Federal Decree-Law No. 47 of 2022. A company can easily owe one, both, or neither at a given moment, so the two questions must be answered independently.
The reason founders confuse the two is a coincidence of numbers: the figure AED 375,000 appears in both regimes. In VAT it is a turnover threshold — the level of sales at which registration becomes compulsory. In corporate tax it is a profit band — the amount of taxable income taxed at 0% before the 9% rate begins. Same number, completely different meaning. Getting that distinction right is the single most useful thing a new company can do before it starts filing anything.
VAT is a transaction tax you collect, not a tax on your profit
VAT was introduced across the UAE on 1 January 2018 under Federal Decree-Law No. 8 of 2017 on Value Added Tax, at a standard rate of 5%. It is an indirect tax: a registered business charges 5% on its taxable sales (output tax), recovers the 5% it pays on its own business purchases (input tax), and remits the difference to the Federal Tax Authority through periodic returns. Economically the tax is borne by the final consumer; the business is a collector standing between the customer and the FTA. That is why a company can be highly profitable and register for VAT, or barely break even and still be required to register — VAT keys off turnover, not margin.
For a newly formed company, the practical questions are: what counts toward the threshold, from what moment, and how fast must you act. Taxable supplies include your standard-rated and zero-rated sales of goods and services, plus imports; wholly exempt supplies and out-of-scope activity do not count toward mandatory registration in the same way. The test looks both backward (the past twelve months on a rolling basis) and forward (the next thirty days), and once you are over the line the law expects you to apply promptly — not at the end of the year.
A note on free zones. Being in a free zone does not automatically exempt a company from VAT. Most free zone companies fall under the ordinary VAT rules; only specific locations designated as a "Designated Zone" receive particular treatment for certain movements of goods, and even they must register once they cross the threshold. Treat free zone status as a question to confirm, never as an assumed exemption.
Threshold decision table: must you, may you, or neither
| Your taxable supplies & imports (rolling 12 months, or expected next 30 days) | What it means | Action |
|---|---|---|
| Above AED 375,000 | Mandatory registration | You must apply to register for VAT on EmaraTax within 30 days of becoming liable. |
| Between AED 187,500 and AED 375,000 (supplies, imports, or taxable expenses) | Voluntary registration available | You may register to recover input VAT and to trade as a VAT-registered business; it is optional. |
| Below AED 187,500 | No registration | You cannot register yet; monitor turnover monthly so you catch the moment you cross a threshold. |
VAT versus corporate tax, side by side
| Dimension | VAT | Corporate tax |
|---|---|---|
| What is taxed | Transactions — the value of taxable supplies of goods and services | Profit — the net taxable income of the business |
| Governing law | Federal Decree-Law No. 8 of 2017 | Federal Decree-Law No. 47 of 2022 |
| Standard rate | 5% | 9% on taxable income above AED 375,000 (0% up to that) |
| Meaning of AED 375,000 | A turnover threshold: register once taxable supplies exceed it | A profit band: income up to it is taxed at 0%, not a registration exemption |
| Who registers | Businesses over AED 375,000 (mandatory) or over AED 187,500 (voluntary) | Taxable persons generally must register regardless of profit level |
| What you file | Periodic VAT returns (typically quarterly) | An annual corporate tax return per tax period |
| Portal & identifier | EmaraTax → a VAT TRN | EmaraTax → a corporate tax TRN |
Have a question about your case?
How VAT registration flows on EmaraTax to a TRN
Create your EmaraTax account
Register on the FTA EmaraTax portal using an email or UAE Pass, then log in. This is the same platform used for corporate tax and excise.
Add the taxable person
Create the taxable person profile for your company under your account, so the registration is filed against the correct legal entity.
Select VAT registration
From the taxable person dashboard, start the VAT registration application (distinct from the corporate tax registration tile).
Complete the application
Enter business details, activities, bank information and turnover, and upload documents: trade licence, owner/manager Emirates ID and passport, MOA, and evidence of turnover such as financial statements or invoices; add customs registration if you import.
Submit and await FTA review
Submit the application. The FTA reviews it and may request clarification or additional documents before approval.
Receive your TRN
On approval the FTA issues a Tax Registration Number (TRN) and a VAT registration certificate. From your effective date you must charge VAT, keep records, and file returns.
How the rules land for typical new companies
A new consultancy expecting AED 500,000 of fees in year one.
What is usually neededIt will cross AED 375,000, so VAT registration is mandatory. It should watch turnover and register within 30 days of the point it becomes liable — often before year-end.
An early-stage startup with AED 200,000 of sales but large setup costs.
What is usually neededBelow the mandatory line but above AED 187,500, so it may register voluntarily — useful when it wants to recover the input VAT on its heavy startup spend.
A free zone trading company assuming it is VAT-exempt.
What is usually neededFree zone status is not a VAT exemption. If its taxable supplies exceed AED 375,000 it must register like any onshore company; "Designated Zone" treatment is narrow and specific.
A profitable company below the VAT threshold but earning above AED 375,000 profit.
What is usually neededIt may have no VAT obligation yet, but corporate tax is a separate question — it must handle corporate tax registration and filing on its own timeline.
Mistakes new companies make with VAT registration
The mistakeTreating VAT and corporate tax as the same registration because both mention AED 375,000.
The fixRegister for each separately on EmaraTax; VAT keys off turnover, corporate tax off profit, under different laws.
The mistakeWaiting until the year ends to register after clearly crossing AED 375,000.
The fixApply within 30 days of becoming liable. Late registration carries an administrative penalty of AED 10,000.
The mistakeAssuming a free zone licence means no VAT applies.
The fixConfirm your VAT position on the facts; most free zone companies register normally once over the threshold.
The mistakeCharging VAT to customers before the TRN is actually issued.
The fixOnly charge VAT from your effective registration date; issue compliant tax invoices showing your TRN.
The mistakeRegistering with weak turnover evidence and no records behind the numbers.
The fixSupport the application with real financials and invoices, and keep records; the FTA can query the declared figures.
Practical guidance for a new company
Build a simple monthly turnover tracker from day one, so you can see a threshold approaching before you cross it rather than after. Decide deliberately whether voluntary registration between AED 187,500 and AED 375,000 helps you — it lets you recover input VAT and can add credibility with larger clients, but it also brings filing obligations that a very small company may not want yet. And keep VAT and corporate tax on separate mental tracks: answer "do I register for VAT?" from your sales, and "do I register for corporate tax?" from the corporate tax rules, because a new company can owe one without the other.
Finally, treat the specific figures and deadlines here as the current framework, not a permanent one. Thresholds, penalties and administrative rules are set by the FTA and by Cabinet decisions and can be updated. Confirm your own position and the current requirements on tax.gov.ae, or with a qualified tax adviser, before you file.
If you are forming a company and want VAT and corporate tax handled correctly from the start — thresholds checked, EmaraTax registrations filed, records set up — tell us your activity, turnover and licence type.
Explore corporate servicesQuestions about VAT registration for a new UAE company
Registration is mandatory once your taxable supplies and imports over the previous twelve months exceed AED 375,000, or you expect them to exceed AED 375,000 within the next thirty days. Voluntary registration is available once your taxable supplies, imports or taxable expenses exceed AED 187,500. Below AED 187,500 you cannot yet register.
They are two separate taxes under two separate laws. VAT (Federal Decree-Law No. 8 of 2017) is charged on transactions at 5% and its registration depends on turnover crossing AED 375,000 or AED 187,500. Corporate tax (Federal Decree-Law No. 47 of 2022) is charged on profit at 9% above AED 375,000 of taxable income. The AED 375,000 figure means different things in each: a turnover threshold for VAT, a 0% profit band for corporate tax. Both are handled on EmaraTax, but each issues its own TRN.
Yes, once its taxable supplies, imports or taxable expenses exceed AED 187,500. The taxable-expenses route is especially relevant for early-stage startups that spend heavily before they earn much, because voluntary registration lets them recover input VAT on that spend. It also brings filing obligations, so it is a deliberate choice, not an automatic one.
Create an account on the FTA EmaraTax portal, add your company as a taxable person, then open the VAT registration application. Enter your business details, activities, bank information and turnover, upload documents such as your trade licence, the owner or manager's Emirates ID and passport, the MOA and evidence of turnover, and submit. After the FTA reviews and approves it, you receive a Tax Registration Number (TRN) and a VAT certificate.
A business that fails to register within the timeframe is subject to an administrative penalty of AED 10,000. This figure was set by Cabinet Decision No. 40 of 2017 as amended by Cabinet Decision No. 49 of 2021, which reduced the late-registration penalty from its earlier level. Because penalties can change, confirm the current amount with the FTA before relying on it.
Being in a free zone is not, by itself, a VAT exemption. Most free zone companies fall under the ordinary VAT rules and must register once their taxable supplies exceed AED 375,000. A limited set of locations designated as a "Designated Zone" receive special treatment for certain movements of goods, but this is narrow and does not remove the registration obligation when the threshold is crossed. Confirm your specific position rather than assuming exemption.
Official sources
- Federal Tax Authority — Registration for VAT (mandatory AED 375,000 / voluntary AED 187,500)
- Federal Tax Authority — Mandatory Registration
- Federal Tax Authority — VAT Registration service (EmaraTax)
- u.ae — The Official Platform of the UAE Government: Register for VAT
- Ministry of Finance — Value Added Tax (VAT), Federal Decree-Law No. 8 of 2017
- Cabinet Decision No. 49 of 2021 amending administrative penalties (late-registration penalty AED 10,000)
- u.ae — Corporate Tax (Federal Decree-Law No. 47 of 2022, 9% above AED 375,000)
This content is for general awareness and is based on the official sources available at the time of the last update. Company-formation and corporate-service requirements, fees, approvals and steps differ by the business activity, the legal form and the jurisdiction, and are set and updated by the competent authorities. It is not legal or financial advice. MANJAZ is a corporate-services provider that helps prepare, coordinate and follow up requirements with the relevant authorities — it is not the Department of Economy and Tourism or any government body, it does not issue trade licences, it cannot approve a business activity, and it does not guarantee any approval.
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