VAT Registration Threshold Calculation in UAE

To determine whether the value of supplies has exceeded the mandatory registration threshold limit or the voluntary registration threshold limit, the following needs to be considered.

• The value of taxable supply of Goods and Services: Taxable supplies refers to all the supplies of goods and services made in UAE on which VAT is levied at the standard rate of 5% including zero-rated supplies. This does not include the notified supplies which are exempted from VAT.
• The value of reverse charge Supplies: Reverse charge supplies are those notified supplies on which the recipient or the buyer are required to pay the VAT to the government unlike forwarding charge, where the supplier will collect VAT from the buyer and pay. The value of such supplies needs to be considered in arriving at the turnover threshold for VAT registration.
• Imports: The value of taxable goods and services imported on which the importer is liable to pay tax.

Let us understand how to calculate the VAT Turnover threshold with an example

Rose General Stores is a supermarket in UAE, engaged in supply of groceries and all types of household products. They also import certain home furnishing products from other countries and supply it to the customers in UAE as well as export it to other countries. The following are the different types of supplies made by Rose General Stores.

To determine Rose General Trader's eligibility for registration in UAE, taxable supplies + exports (zero-rated supplies) + imports + reverse charge supplies should be considered. Exempt supplies will not be considered in arriving at the registration threshold. The registration threshold calculation of Rose General Trader is given below:

The turnover of Rose General Stores for VAT registration is AED 625,000 which has exceeded the mandatory registration threshold of AED 375,000. Thus, Rose General Stores is required to mandatorily register under UAE VAT .