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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

How to Apply for VAT Registration in UAE

April 19, 2018

Applying for VAT registration involves two simple steps. In the first step, you need to create an e-Services account. In the next and last step, you login to your new e-Service Account and complete the VAT registration process. 1. Creation of e-Service Account 2. VAT Registration Process Here’s a step by step guide to help …

UAE Tax Authorities Introduced VAT Roadshow

April 17, 2018

The Federal Tax Authority (FTA), UAE has introduced a roadshow in order to assist business who are not registered yet under the ambit of value-added tax (VAT) and render a profit of the exemption provided by the FTA up to April 30. These new initiatives will start in all seven emirates with the help of …

Who Should Register Under VAT?

April 13, 2018

The value-added tax (VAT) is a consumption-based tax system which was introduced in the UAE and Saudi Arabia. The UAE VAT is applicable on certain goods and products at the standard rate of 5 per cent. VAT is paid by businesses while making a taxable supply and it is ultimately borne by the end consumer. …

Federal Tax Authority (FTA) to Get Tough on VAT Evaders in UAE

April 12, 2018

As on the 100th day of VAT launch, around 275,000 companies and people were registered under VAT, which is about 98.8 per cent of the companies which were obliged to get VAT registration. This effectively puts UAE VAT at number one in the world in terms of VAT compliance ratio. The 100 days of VAT …

UAE Government May Soon Limit VAT only to making charges of Jewellery

April 10, 2018

At present, the 5% VAT is applicable to the entire jewellery piece, including the cost of labour and the cost of item itself. The gold and jewellery industry leaders are in talks with the UAE government to limit the applicability of value-added tax (VAT) only to the making charges in order to reduce the product …

Key Points to Know About VAT Registration in UAE

April 10, 2018

The VAT (value added tax) has been successfully launched in UAE with the last date for registration extended up to April 30, 2018. All eligible businesses in the country must ensure that they are registered for the VAT and follow the regulations. The FTA (Federal Tax Authority) has also recommended that all businesses get equipped …

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