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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 UAE VAT is based on the same concept as followed by the other countries which use this tax system, however, the standard rate of VAT is fixed at 5% for all taxable supplies 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

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

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.

A consumer buys a new dress.

A Definitive Guide for VAT in UAE

VAT Introduction

Check out the guide to get an introduction to the VAT, along with details of registration eligibility, purpose, timeline, criteria and other important basics.

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VAT Registration Guide

A complete overview of VAT registration process for the normal user and business, including details like e-services account, step-by-step process of VAT registration, application, and more.

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VAT User Guide

This guide contains the details of VAT registration, along with the process of making changes (amendments) in VAT application and how to apply for de-registration from the VAT.

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Tax Groups Overview

A quick summary of what tax groups are, the implications of registering as a VAT tax group, eligibility and registration criteria, and the basics of the registration process.

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Tax Group Registration Guide

This is a basic guide to help users with their tax group registrations on the FTA website. It details the process of applying for tax group registration and making amendments.

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Tax Group Complete Guide

A complete user guide that explains the process of tax group registration, de-registration and amendments, along with the procedure of checking the status of the application.

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VAT Tax Group Summary Guide

Contains a quick summary of the tax group user guide mentioning the description of registering a tax group, amending an approved tax group, and de-registering tax groups from the VAT.

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VAT Warehouse Keeper Registration Guide

A guide detailing the process of registering a warehouse keeper and/or a designated zone for VAT, completing the application form, and other related information.

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VAT Warehouse Keeper User Guide

A complete guide explaining the procedure of registering and de-registering a warehouse keeper and/or a designated zone for VAT, and making amendments (if possible) in registration.

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VAT Warehouse Keeper Summary

It contains the summary of the VAT registration, de-registration and amendment procedures for a warehouse keeper and designated zones in UAE

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VAT Import Declaration Guide

A guide for VAT registered and non-registered importers that mentions the various VAT scenarios and required actions, along with the overview of the sign-up process and useful tips.

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VAT Import Declaration Summary Guide

This is a summary of the import declaration guide which users can refer to get an idea of the VAT scenarios for registered and non-registered importers and related details.

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Latest News

Guides and E-learning Modules on UAE Tax Laws

February 21, 2018

The Federal Tax Authority(FTA) has launched over 50 guides and E-learning modules for VAT regulations covering their implementation phase. The director-general of FTA, Khalid Ali Al Bustani said The authorities issued the guides and e-learning as it covers modules like Registration for excise tax, value-added tax(VAT) and TAX group, import and export announcement, TAX return, …

VAT on Real Estate – Impact On Residential & Commercial Buildings in Dubai, UAE

February 20, 2018

The UAE Ministry of Finance, the UAE Federal, and Emirate governments provide many different public services, citizens, and residents.The commercial real estate is charged at standard rate of 5%. We are expecting that businesses will be able to recover the VAT paid their VAT returns and the Government of UAE already provide online VAT Registrations …

VAT Rates UAE 2018 – Standard, Zero, Exempt Rate in Dubai

February 16, 2018

Federal Tax Authority (FTA) of UAE announced full VAT rate list for real estate, transportation, financial services sectors that are completely exempt from Value Added Tax. The UAE and Saudi Arabia are the two member countries of GCC have been implemented VAT, whereas the remaining member countries are implementing the new reform over the coming years. …

Complete Guidance on VAT Return Filing online in UAE 2018

February 16, 2018

As per the normal VAT standard, the returns are filed quarterly, i.e., once in 3 months, or annually in some cases. The VAT returns will be filed online on the official portal of the Federal tax authority. Businesses that are looking forward to making a smooth transition to the new tax system must get familiar …

Tax Invoice Under VAT In United Arab Emirates and Format

February 15, 2018

Tax Invoice is a written or electronic archive in which the taxable person collects complete information of taxable supplies made in a financial year. The Federal Law Number (8) of 2017 regarding the Value Added Tax (the VAT Law) establishes the necessary elements required for a Tax Invoice and the Executive Regulation Number 52 of …

UAE Government Announced VAT Rates 2018

February 10, 2018

The items or supplies to be levied by Value Added Tax (VAT) from 1st January 2018 has been announced by the Federal Tax Authority (FTA). The authority has announced the VAT rates of several items or sectors. Sectors such as healthcare, oil, and gas, transportation, real- estate will be levied with the zero-rated tax under …

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