Many UAE small businesses grow past the VAT registration threshold without noticing, and others keep a VAT registration they no longer need. Both mistakes cost money. Missing the registration deadline carries a fixed AED 10,000 penalty, and a late deregistration builds up a monthly penalty. This guide explains the thresholds, the deadlines and the penalties, so you know when to act.
When you must register for VAT
Registration is mandatory when the value of your taxable supplies and imports:
- exceeded AED 375,000 over the previous 12 months, or
- is expected to exceed AED 375,000 in the next 30 days.
The 12-month test looks back on a rolling basis, not by calendar year. Check it every month, not only at year end. The forward 30-day test catches one-off events, such as signing a large contract.
The AED 375,000 threshold applies to businesses resident in the UAE. The FTA states that it does not apply to foreign businesses.
The 30-day deadline and the AED 10,000 penalty
Once you are required to register, you must submit your registration application to the FTA within 30 days. If you miss it, the penalty is a fixed AED 10,000 under Cabinet Decision No. 40 of 2017, as amended. The consolidated text that includes the amendments effective from 14 April 2026 keeps this amount.
Voluntary registration from AED 187,500
If you are below AED 375,000, you can still choose to register when your taxable supplies, imports or taxable expenses exceed AED 187,500 over the previous 12 months, or are expected to in the next 30 days.
Voluntary registration lets you recover input VAT on your costs, which often helps a start-up that is spending before it sells. You must be able to show evidence of your expected supplies or expenses. Once registered voluntarily, you cannot deregister within the first 12 months.
When you must deregister
A registrant must apply to deregister if:
- it stops making taxable supplies, or
- its taxable supplies over the previous 12 months are below the voluntary threshold of AED 187,500.
The application is due within 20 business days of the event. The FTA will only deregister you once all your VAT returns are filed and all tax and penalties due are paid. Deregistration does not cancel tax or penalties that are still owed.
A late deregistration application costs AED 1,000, and the same amount is added on the same date each month, up to AED 10,000.
What to do now
- Run the 12-month test today. Add up your taxable supplies and imports for the last 12 months, and repeat the check every month.
- Look 30 days ahead. If a new contract or order could push you over AED 375,000, start the registration before the sale.
- Consider voluntary registration if your taxable expenses are above AED 187,500 and you want to recover input VAT.
- Review dormant or closing companies. If a company has stopped trading or fallen below AED 187,500, apply to deregister within 20 business days.
- Clear your backlog first. File any missing returns and pay outstanding amounts, because the FTA will not deregister you until you do.
How Dreambooks helps
Dreambooks tracks your rolling 12-month taxable turnover from your invoices and imports, and shows how close you are to the AED 187,500 and AED 375,000 thresholds, so you can register or deregister on time. Once you are registered, it prepares your VAT returns from the same records and keeps the history the FTA asks for.
Official sources
- FTA: Registration for VAT
- FTA: VAT deregistration service
- FTA: Federal Decree-Law No. 8 of 2017 on VAT and its amendments
- FTA: Cabinet Decision No. 52 of 2017 (VAT Executive Regulation) and its amendments
- Ministry of Finance: Cabinet Decision No. 40 of 2017 on administrative penalties and its amendments
This article is general information as of November 2026, not tax advice. Check the latest Ministry of Finance and FTA guidance, or speak to your tax adviser, before acting.