Understanding VAT Registration in the UAE: What Freelancers and Small Businesses Need to Know

Understanding VAT Registration in the UAE: What Freelancers and Small Businesses Need to Know

If you are freelancing or running a small business in the UAE, you have probably heard about VAT, or Value Added Tax. It is a government tax added to most goods and services, currently set at 5%. The question many ask is: Do I need to register for VAT? Let’s make that simple.

1. Mandatory VAT Registration

You must register for VAT if your total taxable sales and imports in the UAE exceed AED 375,000 over the past 12 months, or if you expect them to cross that amount in the next 30 days.

Example:
If your business made AED 400,000 in sales last year, you must register.

2. Voluntary VAT Registration

You can also choose to register voluntarily if your taxable sales, imports, or even VAT-paid expenses exceed AED 187,500 in the last 12 months, or are expected to reach that soon.

Why register voluntarily?
Because it allows you to claim back VAT paid on business expenses and appear more professional to corporate clients.

3. VAT for Branches and Sole Establishments

If your company has several branches or trade licenses, they are all treated as one legal entity for VAT purposes. The same applies to sole establishments owned by one person — only one VAT registration is needed.

4. Who Can Skip Registration

If your business only makes zero-rated supplies (for example, certain exports or international transport services), you can apply for an exception from VAT registration. If your situation changes, you must inform the Federal Tax Authority (FTA) and register.

Gigsters Tip:
If you are a freelancer or small business owner, keeping track of your income is crucial. Gigsters.app automatically generates VAT-compliant invoices, so you always know when you are nearing the registration threshold — with no spreadsheets and no stress.