VAT Registration

Tax Consultancy in UAE

VAT Registration

Value Added Tax (VAT) is an indirect tax imposed on the consumption of goods and services and has been adopted by nearly 160 countries worldwide as a key source of government revenue. Recognizing its importance, the GCC countries introduced VAT legislation and implemented the tax starting from January 1, 2018, at a standard rate of 5%.

The UAE, one of the most dynamic nations in the Middle East, features multiple free trade zones that serve as major hubs for foreign investment. If your business is registered under the VAT law, it demonstrates official recognition by the government. This makes VAT registration highly significant, reflecting your company’s compliance and credibility within the regulatory framework.

If you own a business in the UAE or plan to establish a presence in the Emirates—regardless of whether it’s small, medium, or large—it is mandatory to register your business under the VAT law. Before exploring the registration process, it’s important to understand which entities are required to register for VAT, the importance of VAT compliance, and then review the necessary steps, documents, and information involved in the registration.

Which Entities Are Required to Register for VAT in Dubai?

The requirement for VAT registration of business entities is based on their income levels. The thresholds that determine which entities must register for VAT are as follows:

Annual Turnover VAT Registration Requirement
Above AED 375,000 Mandatory to register for VAT
Between AED 187,500 and AED 375,000 Voluntary registration allowed
Below AED 187,500 No registration required

When the UAE introduced one of the world’s lowest corporate tax rates in June 2023, it positioned itself to attract international firms. At first glance, it may seem contradictory that imposing a corporate tax would encourage investment and draw in multinational corporations. However, a well-structured and competitive tax regime can enhance a country’s appeal—especially for global companies seeking transparent, stable, and business-friendly environments.

Businesses subject to Corporate Tax (CT) in the UAE are required to register with the Federal Tax Authority (FTA) and obtain a Tax Registration Number within the prescribed timeframe. If a business fails to register voluntarily, the FTA may proceed with automatic registration for CT purposes.

In cases where a business ceases to be subject to CT—such as through cessation of operations or liquidation—it must apply for deregistration with the FTA within three (3) months from the date of cessation.

The FTA will only approve the deregistration once it is satisfied that the business has filed all required CT returns and settled any outstanding corporate tax liabilities and penalties up to and including the date of cessation. If a business fails to apply for deregistration or meet its filing and payment obligations, the FTA may proceed with deregistration based on the available information.

To minimize the administrative burden on taxpayers, businesses in the UAE are required to prepare and file only one corporate tax (CT) return along with the necessary supporting schedules for each tax period. There is no obligation to file a provisional CT return or make advance tax payments.

Each CT return, along with the related documentation, must be submitted to the Federal Tax Authority (FTA) within nine months from the end of the relevant tax period. Similarly, payments to settle the CT liability must also be made within this nine-month window.

In cases where a taxpayer believes they are eligible for a CT refund, they may apply to the FTA with appropriate justification and supporting documentation.

The table below outlines the CT filing and payment deadlines for businesses with financial year-ends on 31 March, 30 June, and 31 December:

Corporate Tax (CT) in the UAE is designed to maintain a competitive and business-friendly environment while aligning with international standards. The following are key features and exemptions under the CT framework:

  1. Individuals will not be subject to CT on income earned from employment, real estate, investments in shares, or other personal income not related to UAE business activities.

  2. Foreign investors who do not conduct business in the UAE are exempt from corporate tax.

  3. Corporate tax will apply to the adjusted accounting net profit of a business, based on international accounting standards.

  4. Businesses operating in free zones can continue to benefit from existing CT incentives, provided all regulatory conditions are met.

  5. The extraction of natural resources remains subject to emirate-level taxation and is excluded from federal CT. This also applies to branches of foreign banks.

  6. No withholding tax will apply to domestic or cross-border payments.

  7. Capital gains and dividends received by a UAE business from qualifying shareholdings are exempt from CT.

  8. Qualifying intra-group transactions and corporate restructurings are also exempt.

  9. Foreign tax paid may be credited against the UAE corporate tax liability.

  10. Businesses will benefit from flexible loss transfer and utilization rules.

  11. Transfer pricing regulations in line with OECD guidelines will be enforced.

With the introduction of corporate tax in the UAE, significant changes are anticipated in the tax obligations and compliance costs for most businesses. To remain compliant under the new regime, companies must accurately assess the tax implications and, if necessary, adapt their corporate structure, operating models, finance and tax functions, reporting systems, legal agreements, and transfer pricing policies.

At Earnest Consultants, our dedicated tax team is here to provide expert guidance and address all your queries related to corporate tax compliance.

For assistance, feel free to contact us at info@earnestuae.com

1. Definition
Corporate Tax (CT) is a direct tax levied on the net income or profit of businesses.

2. Applicability
CT applies to all businesses and commercial activities in the UAE, except for the extraction of natural resources (which is taxed at the Emirate level).

3. Tax Rates

  1. 0% on taxable income up to AED 375,000
  2. 9% on taxable income above AED 375,000

4. Individuals & CT

  1. Salaries and employment income are not subject to CT.

  2. Individuals with a commercial license are subject to CT.

  3. Personal real estate investments are exempt unless a commercial license is required.

  4. Investment returns (dividends, capital gains, etc.) held in a personal capacity are exempt.

  5. Freelance income under a license is subject to CT.

  6. Bank interest and savings income are not subject to CT.

5. Businesses & Special Categories

  1. Intra-group transactions and restructurings are exempt if conditions are met.

  2. Foreign individuals/companies are taxed only if they conduct regular business in the UAE.

  3. Foreign investor income (dividends, interest, royalties, etc.) is generally exempt.

  4. Free zone businesses are subject to CT but can retain incentives if conditions are met.

  5. Free zone businesses must register and file CT returns.

6. Sector-Specific Application

  1. The banking and real estate sectors are subject to CT if engaged in commercial activities (management, construction, brokerage, etc.).

7. Compliance and Filing

  1. Tax losses can be carried forward if conditions are met.

  2. All businesses must register for CT.

  3. CT returns must be filed annually, electronically.

  4. No advance payments are required.

8. Penalties
Non-compliance with the CT regime will result in penalties.

Other Services We Provide

Earnest Consultants is a leading Audit and Accounting Firm in Dubai, offering financial and accounting audits, risk management, inventory management, and asset valuation, backed by experienced and certified accountants committed to ethical standards.

©2025, Earnest Consultants.All Rights Reserved.