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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 Sales tax

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

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VAT Latest News

UAE Government Executes A New VAT Relief Scheme For Charities

December 10, 2018

The UAE Government has made the announcement of a new tax relief scheme for charities who want to compensate for the VAT expenses they have incurred on donations and charities under the VAT reform. The step has been taken to ensure that charities have to pay less VAT and can keep most of the amount …

e-Guarantee Cancellation in FTA portal (A Complete Guide)

December 7, 2018

The situation of UAE import where an e-guarantee is necessary, are the situations in which the importer is not reliable on the import and if the conditions are not satisfied then the e-guarantee helps as financial security for payment of the VAT due. The submitted e-guarantee earlier will be cancelled if the conditions for cancellation …

e-Guarantee for VAT in UAE [A Complete Guide]

December 5, 2018

Here we will discuss all the angles through which the unregistered entity is eligible to pay Value Added Tax on the imports via an e-guarantee while having a look on the process and steps to submit e-guarantee on FTA portal: Context for VAT Payment via e-Guarantee Shifting of goods from one VAT designated zone to …

Know All About Input Credit and Tax Payments Under VAT UAE

November 17, 2018

VAT UAE is considered as a general consumption or final consumer tax which is imposed on most of the transactions of goods and services until any particular commodity is exempted by the law. As per the above line, VAT is levied at every stage of ‘Value Addition’ in the supply chain and the mechanism of …

VAT Penalties: How to Avoid Penalties Under VAT in UAE?

October 25, 2018

It is vital for the CEO of business to know and obey the new rules and regulations of VAT to avoid hard penalties which might be as higher as AED 50,000. Here are the seven steps by which fiscal penalties can be avoided, which is caused due to violations, errors or incorrect record-keeping: VAT Registration …

Federal Tax Authority UAE Begins New Digital Tax System for Tobacco Product in 2019

October 23, 2018

To collect taxes and combat tax avoidance, the Federal Tax Authority (FTA) is ready to launch a tax control system in UAE for tobacco products as per the Decision No. (42) of 2018. To roll out the single integrated set, the scheme is ready to be implemented in alliance with the applicable authority, which guarantees …

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