Value Added Tax (VAT) in UAE
Introduction about Value Added Tax
What is Value
Added Tax (VAT)?
Value Added Tax (VAT) is an indirect consumption tax levied on the supply of goods and services at each stage of the supply chain. VAT is governed by Federal Decree-Law No. 8 of 2017 on Value Added Tax and its subsequent amendments, along with the Executive Regulations issued by the UAE Cabinet.
VAT was introduced in the UAE on 1 January 2018 at a standard rate of 5%, making it one of the lowest VAT rates in the world. It is administered by the Federal Tax Authority (FTA).
Scope of Value Added Tax (VAT) in UAE
VAT will apply to:
- All taxable supplies of goods and services made by businesses registered for VAT in the UAE.
- Imports of goods and services into the UAE from outside the GCC implementing states.
- Businesses with annual taxable supplies and imports exceeding AED 375,000 (mandatory registration threshold).
- Businesses with annual taxable supplies and imports exceeding AED 187,500 (voluntary registration threshold).
- Retail, hospitality, consultancy, telecommunication, and most commercial sectors operating in the UAE.
- E-commerce and digital service providers supplying to customers in the UAE.
Zero-Rated Supplies (0% VAT):
Certain supplies are taxable at 0%, which means no VAT is charged but input VAT can be recovered:Exports of goods and services outside the GCC implementing states.
- Supply of certain investment-grade precious metals (e.g., gold and silver of 99% purity).
- Newly constructed residential properties supplied for the first time within three years of construction.
- Supply of specific educational services and related goods and services.
- Supply of specific healthcare services and related goods and services.
VAT-Exempt Supplies:
The following categories are exempt from VAT — no VAT is charged and input VAT cannot be recovered:
- Supply of certain financial services (as specified in the VAT legislation).
- Residential properties (other than the zero-rated first supply).
- Supply of bare land.
- Local passenger transport services.
VAT will not apply to:
- Supplies made by a person who is not registered and not required to register for VAT.
- Disbursements made purely as an agent on behalf of a principal.
- Transactions falling outside the scope of UAE VAT law (e.g., certain government activities carried out in a sovereign capacity).
- Supplies between members of a VAT group (treated as disregarded for VAT purposes).
- Transfers of a going concern that meet the prescribed conditions.
VAT Rate
As per the Federal Tax Authority, UAE VAT rates are
- 5% – Standard rate applied to most goods and services supplied within the UAE.
- 0% – Zero rate applied to exports, international transport, qualifying healthcare and education, and certain investment-grade precious metals.
- Exempt – No VAT on specific financial services, residential property (secondary supply), bare land, and local passenger transport
VAT REGISTRATION DEADLINE
Register within 20
business days of crossing
the mandatory threshold.
Any business must apply to register for VAT with the Federal Tax
Authority (FTA) within 20 business days of crossing the mandatory
registration revenue threshold of AED 375,000. Businesses with
taxable supplies of at least AED 187,500 may also apply for
voluntary registration.
Late Registration Penalty
- AED 10,000
Book for Corporate
Tax registration Service
Toll Free Number
800 TAX24
Email us
heelo@tax24.ae
Whatsapp Chat
+971561620954
Corporate Tax Registration Criteria:
All UAE Juridical Persons
LLCs, PSCs, PJSCs, free zone entities, branches and other legal persons incorporated in the UAE — registration is mandatory regardless of turnover.
Natural Persons (Individuals)
Required to register if their annual business or business- related turnover exceeds AED 1 million in a Gregorian calendar year.
Non-Resident Persons
Must register if they have a Permanent Establishment (PE) in the UAE, derive State-Sourced Income, or have a nexus
in the UAE.
Free Zone Persons
Must register and file CT returns even if claiming the 0%
Qualifying Free Zone Person (QFZP) regime — registration
is not optional.
90-Day Deadline (New Entities)
Application must be submitted to the FTA within 90 days from
the date of trade license issuance for newly incorporated
businesses.
Late Registration Penalty — AED 10,000
A fixed administrative penalty of AED 10,000 is imposed for
failure to register within the specified timeframe.
Required Documents
Trade License, Emirates ID & Passport copies of all
shareholders, MOA / valid POA, Manager contact details, and
financial information for the first tax period.
Value Added Tax (VAT) Packages
Stay VAT-compliant in the UAE with our exclusive packages, crafted specifically for small and
growing businesses operating under different turnover brackets.
Micro
Filing Lite
Features:
- Quarterly VAT Filing (4 returns)
- Annual Corporate Tax Return Filing
Micro
Tax Compliance
Features:
- Quarterly VAT Filing (4 returns)
- Annual Corporate Tax Return Filing
- Accounting Software (E-Invoicing com)
- VAT Registration
- Corporate Tax Registration
Micro Business
Compliance
Features:
- Quarterly VAT Filing (4 returns)
- Annual Corporate Tax Return Filing
- Accounting Software (E-Invoicing com)
- VAT Registration
- Corporate Tax Registration
- Accounting & Bookkeeping
- Financial Statements
- Statutory Audit
Nil Return
Features:
- Zero transaction submission to FTA
- Nil VAT Return Filing
- FTA portal review & submission
- Filing confirmation
- Basic support
+ Upgrade Available:
with bookkeeping & advisory
Revenue Below AED 3 Million
Features:
- Quarterly VAT filing + management report
- E-Invoicing software (FTA-compliant)
- VAT-compliant bookkeeping
- Input / Output VAT reconciliation
- VAT computation summary
+ Premium Option:
with annual VAT health check
Revenue AED
3–5 Million
Features:
- VAT filing (quarterly / monthly)
- E-Invoicing software (FTA-compliant)
- Financial statements
- Compliance review
- VAT summary report
+ Premium Option:
with audit + advisory
Revenue Above AED 5 Million
Features:
- Full VAT & audit package
- E-Invoicing software (FTA-compliant)
- Senior advisor consultation
- Compliance + structuring
- Strategic VAT planning
+ Premium Option:
with audit + advisory
VAT Advisory & Consultation
Features:
- VAT impact assessment
- Transaction-level VAT advisory
- Cross-border & GCC VAT guidance
- Sector-specific VAT opinions
VAT Refund & Reconsideration
Features:
- VAT Refund & Reconsideration
- FTA reconsideration requests
- Tourist / Business Visitor refund
- Penalty waiver applications
VAT Audit & Deregistration
Features:
- FTA VAT audit representation
- Voluntary disclosure (Form 211)
- VAT deregistration service
- Record-keeping & compliance review
Book for Corporate Tax Registration Services
Email us:
heelo@tax24.ae
Whatsapp Chat:
+971561620954
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Experience Made Easier
Find quick answers to common questions about our technology apps,
helping you get started, troubleshoot issues, and make the most of every
feature.
What is a “Business” or “Business Activity”?
Who is considered resident for UAE CT purposes?
Companies incorporated in the UAE, such as LLCs, PSCs, PJSCs, and other juridical entities, will be classified as resident persons for Corporate Tax (CT) purposes.
How are non-residents subject to UAE CT?
Who will be subject to UAE CT?
What is a Tax Period?
Companies incorporated in the UAE, such as LLCs, PSCs, PJSCs, and other juridical entities, will be classified as resident persons for Corporate Tax (CT) purposes.
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