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
VAT Registration Criteria:
Mandatory Registration — AED 375,000
Required if your total taxable supplies and imports in the UAE exceeded AED 375,000 in the past 12 months, or are expected to exceed it in the next 30 days.
Voluntary Registration — AED 187,500
Optional if your taxable supplies and imports, or taxable expenses, exceeded AED 187,500 in the past 12 months (minimum revenue threshold).
20 Business Days Deadline
Application must be submitted to the FTA within 20 business days from the date the mandatory threshold is crossed.
Non-Resident Businesses
Must register for VAT regardless of turnover if they make any taxable supplies in the UAE where no other person is required to account for the VAT.
Tax Group Registration
Two or more related legal persons resident in the UAE may apply to register as a single VAT group.
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
Valid Trade License, Emirates ID & Passport of owner/shareholders, MOA/POA, authorised signatory details, bank account (IBAN), customs registration (if applicable), and 12-month turnover declaration.
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
Toll Free Number:
800 TAX24
Whatsapp Chat:
+971561620954
Email us:
heelo@tax24.ae
Your Questions Answered, Your 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 VAT and when was it introduced in the UAE?
VAT is an indirect consumption tax levied on most goods and services. It was introduced in the UAE on 1 January 2018 at a standard rate of 5%.
What is the VAT rate in the UAE?
The standard VAT rate is 5%. Certain supplies are zero-rated (0%) or exempt, including specific healthcare, education, exports, and financial services.
How do I file my VAT return?
VAT returns must be filed electronically through the FTA’s EmaraTax portal within 28 days from the end of each tax period, along with payment of any VAT due.
Who is required to register for VAT?
Any business whose taxable supplies and imports exceed AED 375,000 in the past 12 months (or expected in the next 30 days) must register. Voluntary registration is available from AED 187,500.
What is a Tax Period for VAT?
The standard tax period is quarterly. The FTA may assign a monthly tax period to larger businesses or those with specific circumstances.
What are the penalties for late VAT registration or filing?
Penalties include AED 10,000 for late registration, AED 1,000 for a first late filing (AED 2,000 for subsequent), and additional percentage-based penalties on unpaid tax.