Key Differences Between Registration under Corporate Tax and Registration under VAT in the UAE
A Clear Comparison: Corporate Tax vs. VAT Registration in the UAE
UAE Corporate Tax (CT)
- Registration Applicable to all the companies
- Registration Applicable to individuals subject to the income threshold of AED 1 Million.
UAE VAT
- Mandatory registration if taxable turnover exceeds AED 375,000 in the last 12 months or expected in next 30 days
- Voluntary registration if taxable turnover exceeds AED 187,500 in the last 12 months or expected in next 30 days
Calculation of the Taxable Turnover for the VAT Registration
Understanding the turnover thresholds is crucial for determining whether your business must register for VAT in the UAE:
What is taxable turnover for the Mandatory VAT Registration?
- Threshold: AED 375,000
- Who Should Register: Businesses and individuals making taxable supplies in the UAE that exceed this threshold in the past 12 months or are expected to in the next 30 days.
What is taxable turnover Voluntary VAT Registration?
- Threshold: AED 187,500
- Who Can Register: Businesses not meeting the mandatory threshold but exceeding this lower limit. This is ideal for startups looking to claim input VAT and enhance business credibility.
What is Taxable Turnover?
- Taxable turnover is the total value of supplies a business makes that are subject to UAE VAT, including:
- Standard-rated supplies (5%)
- Zero-rated supplies (0%)
- Reverse charge transactions
- Imports of goods/services
- Deemed supplies (e.g., free samples to employees)
Examples of Standard-Rated Supplies (5%) in the UAE
- Retail Sales of Goods /Electronics, clothing, furniture, groceries (non-basic food items)
- Example: Selling laptops in a Dubai electronics store
- Commercial Property Rentals/Leasing of offices, warehouses, retail spaces
- Example: Renting a commercial office in Abu Dhabi
- Hotel Accommodation/Room bookings, hotel services
- Example: 5% VAT on hotel stay in Sharjah
- Restaurant & Catering Services/Dine-in and takeaway meals (non-subsidized)
- Example: A Dubai restaurant charging VAT on meals
- Professional Services/Consultancy, legal services, accounting
- Example: VAT charged by a business consultancy firm in the UAE
- Automobiles and Spare Parts/New and used cars, car parts, repair services
- Example: Selling a vehicle in Dubai or Sharjah
- Utilities/Electricity and water bills (for commercial use)
- Example: A business paying DEWA bills with 5% VAT
- Advertising and Marketing Services/Digital or print media services
- Example: A digital agency billing clients with VAT in Dubai
- Event Management and Ticket Sales/Corporate event planning, concert ticket sales
- Example: Selling exhibition tickets with 5% VAT
- Telecommunications Services/Mobile phone bills, internet charges
- Example: Etisalat or du billing with VAT
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