A UAE resident business's taxable supplies and imports total AED 400,000 over the preceding 12 months. Under UAE VAT Law (Federal Decree-Law No. 8 of 2017), what is this business's VAT registration position?
- The business must register for VAT within 30 days, because AED 400,000 exceeds the AED 375,000 mandatory registration threshold
- The business may voluntarily register if it wishes, but registration is not required until taxable supplies exceed AED 187,500
- The business is exempt from registering because it has not yet exceeded the AED 1,000,000 Corporate Tax natural-person turnover threshold
- The business must wait until the next calendar year end before assessing its registration obligation, since VAT thresholds are tested only once a year
Why A? And why not the others?
Correct answer: A. The business must register for VAT within 30 days, because AED 400,000 exceeds the AED 375,000 mandatory registration threshold
Under UAE VAT Law, a business whose taxable supplies and imports exceed the AED 375,000 mandatory registration threshold over a rolling 12-month period (or expected in the next 30 days) must apply to register with the Federal Tax Authority within 30 days of becoming liable. AED 400,000 exceeds that threshold, so mandatory registration applies. Option B is wrong because it describes the separate AED 187,500 voluntary registration threshold, which is irrelevant once the mandatory threshold has already been exceeded. Option C is wrong because it confuses the unrelated AED 1,000,000 Corporate Tax turnover threshold for natural persons with the VAT registration threshold, which is a different tax with its own AED 375,000 test. Option D is wrong because the mandatory threshold is assessed on a rolling 12-month basis (or forward-looking 30-day projection), not only at a fixed annual date.
Source: UAE Federal Decree-Law No. 8 of 2017, Article 13 and Federal Tax Authority VAT registration guidance (mandatory registration threshold)