VAT compliance remains one of the most closely monitored tax areas by the Federal Tax Authority (FTA). Even in 2025, many businesses receive penalties for late VAT registration, incorrect threshold calculations, and misunderstanding Free Zone VAT rules.
What Is VAT Registration in the UAE?
VAT registration is the process of registering with the FTA to charge, collect, and report VAT at 5%. Upon registration, a Tax Registration Number (TRN) is issued.
Mandatory VAT Registration Threshold
Businesses must register if taxable supplies exceed AED 375,000 in the last 12 months or are expected to exceed it in the next 30 days. Late registration results in an AED 10,000 penalty.
Voluntary VAT Registration
Businesses may voluntarily register if taxable supplies exceed AED 187,500. This allows recovery of input VAT and improves credibility.
VAT Registration for Free Zone Companies
Free Zone companies are not automatically exempt from VAT. Registration depends on the nature of supplies and turnover thresholds.
VAT Registration Process
1. Create FTA e-Services account
2. Submit VAT registration application
3. Upload supporting documents
4. Receive TRN
Common VAT Registration Mistakes
Late registration, incorrect turnover calculation, misunderstanding exempt supplies, and assuming Free Zone exemption.
Conclusion
VAT registration compliance is critical in 2025. Early registration prevents penalties and ensures smooth compliance.