Those with annual turnover of more than AED375,000 (approximately US$100,000) are mandated to register.
Not all businesses in the UAE will need to go through the tedious process of registering for the value-added tax. The Ministry of Finance issued an announcement that states that businesses with a turnover of AED375,000 are required to register for value-added tax (VAT) which will be implemented in the UAE on 1 January 2018.
The ministry has announced that those with revenue below AED375000 but over AED187500 will have an option to register. Which means that they may if they like, register under VAT. But if they don't then they do not have to collect VAT from their customers.
This number however, if it is an annual number, appears to be very small and it may bring a lot of small businesses within the scope of VAT.
Some may prefer to register even if they are exempt because if they don’t, they may not be able to claim back the VAT paid on their purchases.
Starting next year, a 5 per cent levy will be charged on all supplies of goods and services, unless specifically exempted or zero-rated, in the UAE. The levy will be implemented across the Gulf Cooperation Council (GCC) region, with some states given an option to join in on January 1st 2019.
A VAT law has yet to be enacted, but the Federal National Council in March 2017 passed a draft legislation, the Tax Procedure Bill, that will pave the way for the collection of taxes.