Understanding the 2025 VAT Amendments: What Cabinet Decision No. 100 Means for UAE Businesses

The amendments introduced by Cabinet Decision No. 100 of 2025 cover multiple critical areas of VAT administration.  Below are the most important updates UAE businesses should know:

Revised VAT Registration and Deregistration Rules

One of the most important updates revolves around VAT registration and deregistration.

• Mandatory Registration Threshold: Remains at AED 375,000, but the enforcement mechanisms have been strengthened.  Businesses that exceed this threshold must register within 30 days, and the FTA now has the authority to auto-register businesses if they fail to do so.
• Voluntary Registration Threshold: Set at AED 187,500, allowing startups and small businesses to register early if they expect taxable supplies or expenses to exceed this limit.
• Authority-Initiated Deregistration: A new clause, Article 14 (bis), empowers the FTA to deregister businesses that no longer meet VAT registration requirements or fail to comply with regulations — a move designed to protect the integrity of the tax system.

This emphasizes the importance of maintaining accurate records, filing timely returns, and ensuring continued eligibility under VAT law.   Businesses can minimize risks by working with professionals offering VAT services in Dubai, ensuring ongoing compliance and avoiding penalties.

VAT Grouping and Related Party Rules

The amendment provides clarity on VAT Grouping, especially for companies under common ownership or management.

• Two or more entities can form a Tax Group if they meet related party conditions based on economic, financial, and regulatory association.
• The FTA can reject applications if it believes grouping may lead to tax evasion or revenue loss.
• The representative member of a tax group bears full responsibility for VAT filings and payments, with all members jointly liable for due tax.
• If a member leaves the group, they are immediately considered a separate registrant.

For large corporations with multiple entities, consulting with firms specializing in VAT services in Dubai ensures proper structuring and compliance during VAT group registration or modification.

Tax Deregistration Conditions Tightened

The new rules make deregistration a more monitored and compliance-driven process.

A business can only apply for tax deregistration if:

1. It has ceased taxable activities, and
2. Its taxable supplies or expenses in the past 12 months are below the voluntary threshold.

Additionally, the FTA may automatically deregister entities that fail to submit returns, pay taxes, or respond to notifications.  Businesses must also file a final VAT return, settle outstanding liabilities, and account for deemed supplies on remaining assets before deregistration is completed.

 Recognition of Virtual Assets Under VAT

One of the most forward-looking updates is the introduction of a formal definition for Virtual Assets.  The regulation defines them as “A digital representation of value that can be digitally traded or converted and can be used for investment purposes, excluding digital representations of fiat currencies or financial securities.”

This inclusion signifies that digital assets and cryptocurrencies may now fall under taxable supplies, depending on how they are used or exchanged.

As the UAE continues to position itself as a global hub for digital finance and virtual asset trading, businesses engaged in crypto or digital commerce should consult professionals providing VAT services in Dubai to determine their VAT obligations on such transactions.

Clarifications on Deemed Supplies and Thresholds

The amendment refines rules for deemed supplies, which include the use or transfer of business assets for non-business purposes.

• If the value of goods supplied to a recipient in a 12-month period does not exceed AED 500, it is not treated as a deemed supply.
• A total of AED 2,000 per supplier (or AED 250,000 for government entities) serves as the annual threshold for output tax on deemed supplies.

These thresholds help reduce administrative burdens for small-scale internal transfers and promotional activities.

 Enhanced Rules for Exports and Zero-Rated Supplies

Export and zero-rating conditions have also been clarified:

• Direct Exports must be completed within 90 days of supply and supported by customs and commercial evidence.
• Indirect Exports require the overseas customer to handle export logistics, but documentation is mandatory.
• Certain government-to-government transfers and charity activities continue to enjoy zero-rating under specific conditions.

These clarifications reduce disputes over export classifications and ensure consistency in applying zero-rated treatment across sectors.

 Focus on the Integrity of the Tax System

A recurring theme throughout Cabinet Decision No. 100 of 2025 is the protection of the tax system’s integrity.
The FTA now has broader powers to:

• Deregister inactive or non-compliant entities,
• Enforce tax collection through representative members, and
• Reject VAT Grouping applications that may facilitate evasion.

This shows the UAE’s proactive stance on ensuring that every registrant contributes transparently to the VAT ecosystem.