Any business that is required to be VAT registered and charge VAT from 1 January 2018 must register for VAT purposes, in the manner specified by the Federal Tax Authority, prior to that date. The Government is intending to open VAT registrations
from the third quarter of 2017 on a voluntary basis and from the final quarter of 2017 on a compulsory basis for those that choose not to register earlier.
In order to determine which businesses must be VAT registered, a VAT registration threshold shall apply for all UAE-resident businesses:
• A business must register for VAT if they make taxable supplies or imports that exceed the mandatory registration threshold of AED375,000.
• A business may choose to register for VAT voluntarily if their taxable supplies and imports are less than the mandatory registration threshold, but exceed the voluntary registration threshold of AED187,500.
• A person may register voluntarily if their expenses exceed the voluntary registration threshold (e.g. start-up businesses with no turnover).
• Exempt supplies and supplies outside the scope of VAT are not used in calculating the VAT registration thresholds.
No threshold applies to non-resident businesses but if they make taxable supplies within the UAE, they will be required to register for VAT (e.g. maintenance works on a building located within the UAE). However, in circumstances where any other
UAE resident business is responsible for accounting for VAT on that supply (e.g. self-assess VAT under the reverse charge mechanism), the VAT registration shall not be required.
Businesses that satisfy certain conditions (such as being resident in the UAE, being related/associated parties and at least one business being VAT registered) will be able to register as a VAT group.