TaxSavvyAE

VAT registration when starting a mainland company

Do I need VAT registration as soon as my company is licensed?

The situation

VAT registration is not automatic on licensing. It becomes mandatory when taxable supplies and imports pass AED 375,000 in the last 12 months or are expected to within the next 30 days.

The law

  • Art 13, Federal Decree-Law 8 of 2017: Mandatory registration threshold test
  • Art 17, Federal Decree-Law 8 of 2017: Voluntary registration above AED 187,500 of supplies or expenses

What it means for you

Run the test every month on a rolling 12-month basis and look forward 30 days. Example: a new company signs a single AED 400,000 contract to be invoiced next month, so it already expects to exceed the threshold and must apply now. If expected supplies are lower but costs with VAT are high, voluntary registration from AED 187,500 lets you recover input VAT.

What to do

  1. Total taxable sales and imports for the last 12 months.
  2. Add contracts expected in the next 30 days.
  3. If above AED 375,000, apply on EmaraTax.
  4. If between AED 187,500 and 375,000, decide on voluntary registration.

We can do this for youMainland company setup in Dubai or Abu Dhabi: activity, legal form, trade licence, office and first registrations: AED 4,500

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