What happens if I exceed the VAT threshold but don’t register?

WHAT HAPPENS IF I EXCEED THE VAT THRESHOLD BUT DON’T REGISTER?

What happens if I exceed the VAT threshold but don’t register in the UAE? Learn the penalties, risks, and what to do next. TAXESMAN explains.

What Happens If I Exceed the VAT Threshold but Don’t Register?

This is a critical question for business owners in the UAE, and one that often comes up too late.

Many SMEs, freelancers, and startups in Dubai, Abu Dhabi, Sharjah, and free zones exceed the VAT threshold without realising it, especially when revenue grows quickly or multiple income streams are involved.

In this article, you will learn exactly what happens if you exceed the VAT threshold but don’t register, what penalties apply, and how to fix the situation before it gets worse.

If you think you may have crossed the threshold, TAXESMAN can help you act fast.

What Is the VAT Registration Threshold in the UAE?

Before explaining what happens if you exceed the VAT threshold but don’t register, it is important to understand the rule.

In the UAE:

1. Mandatory VAT registration applies when taxable supplies exceed AED 375,000 in a rolling 12-month period
2. You must apply for VAT registration within 30 days of exceeding the threshold

This rule applies to mainland companies, free zone companies, and freelancers.

If you are unsure whether you crossed the threshold, TAXESMAN can review your turnover quickly.

What Happens If I Exceed the VAT Threshold but Don’t Register on Time?

Immediate compliance issue

If you exceed the VAT threshold but don’t register within 30 days, the Federal Tax Authority considers this a compliance failure.

This means:

1. You were legally required to be VAT registered
2. You should have been charging VAT
3. You should have been filing VAT returns

Even if the delay was unintentional, the consequences still apply.

Need help checking your registration date exposure? Contact TAXESMAN today.

What Penalties Apply If I Exceed the VAT Threshold but Don’t Register?

Late VAT registration penalty

One of the biggest risks when asking what happens if I exceed the VAT threshold but don’t register is the penalty.

The FTA imposes an administrative penalty of AED 10,000 for failing to submit a VAT registration application on time.

This penalty applies even if:

1. You did not know about the threshold
2. You planned to register later
3. You did not charge VAT to clients

If you want to minimise damage, TAXESMAN can guide you on the next steps.

Do I Still Owe VAT If I Didn’t Register?

A costly misconception

Yes. This is one of the most dangerous misunderstandings.

If you exceed the VAT threshold but don’t register:

1. You may still owe output VAT from the date you should have registered
2. You may have to pay VAT out of your own pocket if you didn’t charge clients
3. Late payment penalties may also apply

This is why ignoring VAT registration can quickly turn into a serious cash-flow problem.

TAXESMAN can help calculate your exposure and correct it properly.

What Happens During an FTA Review or Audit?

If the FTA detects that you exceeded the VAT threshold but didn’t register, they may:

1. Backdate your VAT registration
2. Assess unpaid VAT
3. Apply penalties and late payment charges
4. Request records for past periods

FTA reviews are often triggered by:

1. Bank information
2. Corporate tax or other filings
3. Third-party data

If you want to prepare before the FTA contacts you, TAXESMAN can help.

Real Examples: What Happens If I Exceed the VAT Threshold but Don’t Register?

Dubai example: Growing consultancy

A Dubai-based consultancy exceeded AED 375,000 in revenue but only noticed months later.

Result:

1. AED 10,000 late registration penalty
2. VAT assessed from the date registration should have happened
3. VAT paid from the company’s own funds

Abu Dhabi example: Freelancer with multiple clients

A freelancer in Abu Dhabi crossed the VAT threshold through several small contracts.

Because VAT wasn’t charged, the freelancer had to absorb the VAT cost later.

Free zone example: Startup scaling fast

A free zone startup scaled faster than expected and crossed the VAT threshold.

The founders assumed free zone status meant no VAT registration.

This is a common and expensive mistake. TAXESMAN can clarify VAT obligations for free zone companies.

What Should I Do If I Already Exceeded the VAT Threshold?

If you are asking what happens if I exceed the VAT threshold but don’t register, the most important thing is what you do next.

Practical steps include:

1. Applying for VAT registration immediately
2. Identifying the correct effective registration date
3. Preparing past records and invoices
4. Assessing unpaid VAT exposure
5. Filing VAT returns correctly

Do not ignore the issue or wait for the FTA to contact you.

TAXESMAN can manage this entire process for you.

How to Avoid This Situation in the Future

To avoid facing this problem again:

1. Monitor your rolling 12-month turnover
2. Review revenue monthly, not annually
3. Understand what counts as taxable supplies
4. Get professional advice early when revenue grows

If you want ongoing VAT monitoring and peace of mind, TAXESMAN is here to help.

What Happens If I Exceed the VAT Threshold but Don’t Register?

To recap, what happens if you exceed the VAT threshold but don’t register in the UAE?

1. You face a AED 10,000 late registration penalty
2. You may owe VAT from the date you should have registered
3. You may pay VAT from your own pocket if it wasn’t charged
4. You risk additional penalties and FTA scrutiny

Don’t take chances with VAT compliance. Let TAXESMAN assess your situation, register you correctly, and handle VAT filings the right way.

FAQs: What Happens If I Exceed the VAT Threshold but Don’t Register?

What happens if I exceed the VAT threshold but don’t register?

You may face a AED 10,000 penalty, owe backdated VAT, and be required to file VAT returns.

Is the VAT threshold the same for free zone companies?

Yes. The VAT threshold applies to both mainland and free zone businesses.

Can the FTA backdate my VAT registration?

Yes. The FTA can apply an effective registration date based on when you exceeded the threshold.

What if I didn’t charge VAT to clients?

You may still owe VAT and have to pay it yourself.

Who can help me fix late VAT registration?

TAXESMAN can review your turnover, handle registration, and manage VAT compliance.