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The introduction of VAT in UAE

The value-added tax (VAT), which came into effect from January 1, 2018, in UAE, is a consumption based tax which will be applicable at each stage of the 'supply chain'. That means, any UAE business making a taxable supply of goods and services will have to pay VAT on that supply. The VAT UAE is based on the same concept as followed by the other countries which use this tax system, however, the standard rate is fixed at 5% for all taxable supplies for VAT in UAE.
As per the VAT rules and regulations, some basic services (and goods) like food, public transport, and some healthcare services are exempt from the VAT, while some other services will be taxed at zero percent. You can find out more about VAT-exempt and non-exempt supplies on our blog. The VAT shall be levied at each stage of the supply chain, but there is a concept of input credit through which businesses can claim their taxes back from the government, and the ultimate VAT cost is borne by the end consumers.

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Why VAT in UAE ?

VAT has been implemented in UAE with the aim to reduce the country's dependency on oil resources for revenue. It will create a new and stable source of income for the government, which will be utilized to provide better and more advanced public services. So, the ultimate benefit of VAT is to the general public.

What will be the VAT Rates?

The standard VAT rate in UAE is 5%, that means most of the taxable supplies will be taxed at 5%. However, some services are zero-rated under VAT while some others are kept free of tax. Click to review full VAT rate list

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Who will pay the VAT?

The VAT will be paid by a business (with annual turnover above Dh375,000) in UAE on any of their taxable supplies of goods and services. The tax is applicable at each stage of the supply chain. The VAT cost is ultimately borne by the end consumer when they pay the actual price (base price + VAT) at the time of purchasing a taxable product/service.

When was VAT launched?

VAT was officially launched on January 1, 2018 in UAE and has been implemented on all eligible supplies across the country. The registrations for VAT started in 2017.

VAT Return and Payment Process

A farmer grows cotton which is plucked and sold to a factory

A farmer grows cotton which is plucked and sold to a factory

The factory processes the cotton and manufactures clothes which are sold to a retail chain

The factory processes the cotton and manufactures clothes which are sold to a retail chain

The clothes are stocked in stores and placed for sale to consumers

The clothes are stocked in stores and placed for sale to consumers.

A consumer buys a new dress

A consumer buys a new dress.

A farmer grows cotton which is plucked and sold to a factory

A Definitive Guide for VAT in UAE

VAT Return

VAT Return

What is VAT return? How to file VAT return in the UAE? Rules and guidelines to follow while filing VAT return on the FTA website

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Vat Refund

Vat Refund

What is VAT refund? How to claim VAT refund in UAE? Which supplies are eligible for VAT refund and which ones are not?

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VAT Registration

VAT Registration

VAT eligibility and registration process on the FTA website. VAT registration deadline and threshold limit for UAE businesses

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Vat Calculator

Vat Calculator

Online VAT calculation tool for UAE businesses. Calculate your VAT liability and how much tax you need to pay in a particular month.

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VAT Rate

VAT Rate

VAT is applicable at the standard rate of 5% on most supplies in the UAE. Check out details of VAT rate, zero rate and exempt supplies

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VAT Impact industry

VAT Impact industry

A real-time report on VAT impacts on various industries in the UAE, including real estate, business, health, fuel, food and more

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VAT Invoice

VAT Invoice

VAT compliant bills and invoicing, and how to produce VAT invoice for taxable supplies made by registered businesses in the UAE

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How to maintain vat account and records

How to maintain vat account and records

Details on which records need to be maintained by businesses under the VAT and how to maintain them, and for how long

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VAT Penalty

VAT Penalty

Details of penalty on violation of VAT rules, including no or late filing of VAT returns, late registration, and any kind of VAT fraud.

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VAT Checklist

VAT Checklist

Things a business needs to do in order to get VAT compliant in the UAE, including the details of VAT eligibility, laws and regulations

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VAT Payment

VAT Payment

How and when to pay VAT, the options for making VAT payment, VAT calculation and payment online/offline, VAT refund and more

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VAT v/s income tax

VAT v/s income tax

How is VAT different from income tax? Which tax is eligible for which persons/businesses? Tax applicability and eligibility and differences

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VAT Latest News

FTA Announce Three UAE Free Zones List Of VAT Exempted Areas

July 12, 2018

Three UAE Free Zones Exempted Areas The Federal Tax Authority (FTA) has declared three new UAE free zones that will be exempted from the VAT, adding them to the list of vat-free designated zones. The total number of designated zones in the UAE now stands at 23, after the latest edition. All these areas are out …

VAT on Goods & Services supplied from Designated Zone in UAE

June 6, 2018

A Designated Zone is a specific region in the UAE that is treated as outside the implementing States for the VAT purpose. Since these zones are out of the purview of the VAT UAE, the computation of VAT on the supplies made from a Designated Zone requires a different mechanism. VAT applicability to services supplied …

UAE Exchange Now Accepting VAT payments

June 4, 2018

Following the release of the GIBAN system to make it easier for UAE residents and businesses to pay their VAT dues, the FTA has now started accepting VAT payments through UAE Exchange. In a recent announcement, UAE Exchange has said that registered businesses in the UAE can now use the Exchange services for making payments …

VAT Invoices UAE – Tax Credit Note Explained

June 1, 2018

Tax Credit Note is one of the VAT invoices that a registered taxpayer issues to customers in specific conditions. In this article, we will learn more about the eligibility, conditions, and format of Tax Credit Note. The VAT rules of GCC make it compulsory for registered taxpayers to attach proper VAT invoices for all their …

FTA Clarifies Queries About VAT on Diamonds And Gold in UAE

May 31, 2018

While answering questions about various VAT related issues, FTA on Wednesday said that the recently introduced VAT reverse charge mechanism on precious items such as gold and diamond is only applicable to commercial transactions/trading of these items between registered dealers. VAT on Gold and Diamonds in UAE Supplies by a registered VAT dealer to another …

How to Pay VAT on Commercial Properties in UAE?

May 30, 2018

VAT at the rate of 5% is applicable to the sale and renting of commercial properties in the UAE starting from January 1, 2018. The buyer of a commercial property is liable to pay VAT by registering on the FTA portal. In case of a rental commercial property, the owner is liable to pay VAT. …

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