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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.


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

VAT Compliance Checklist for Businesses in UAE

March 16, 2018

The value-added tax has been launched in the UAE, and businesses are working on making themselves VAT compliant. However, the confusion around VAT rules and compliance norms still persist. This guide will help you by explaining everything a business should do to get VAT compliant. Note: The incorrection or fraud of any kind in the …

UAE Cabinet Decides to Freeze Tax-hike

March 15, 2018

Putting an end to the rumours of a probable increase in the rate of the value-added tax (VAT) from 5 per cent to 10, the UAE cabinet confirmed that there will no new taxes at least for the next three years. Many businesses and citizens were asking questions about the possibility of an increase in …

FTA VAT Guide for Real Estate in UAE

March 14, 2018

The Federal Tax Authority (FTA), which is the official tax authority for VAT in UAE, has issued an official guide to assist real estate businesses and taxpayers to understand the laws and regulations regarding the applicability of the newly launched VAT system to the supply of real estate for both commercial and residential purposes. Even …

10 Important Things You Should Know About VAT in UAE

March 9, 2018

The VAT (Value Added Tax) was implemented in the UAE and Saudi Arabia from 1 January 2018, as an indirect tax, which will be levied on the supply of specific goods and services at a fixed rate of 5 percent. Let’s find out some important things every UAE citizen/business should know about VAT. 1. What …

UAE VAT Impact on Inflation Rate Increased to 4.8 %, Jumped to Almost double

March 8, 2018

In the first month after the implementation of a 5 percent VAT in UAE, the inflation (and the price of consumer products) jumped to almost double. According to the national statistics agency, the inflation rate increased to 4.8 percent year on year, which is the highest since 2015, and almost double of December 2017’s 2.7 …

VAT Impact – No Hike in Government Fees for Three Years in Dubai

March 8, 2018

UAE had introduced the VAT Tax regime on the 1st of January this year. The rate of VAT was fixed at 5 percent. The objective of the new Tax Regime was to increase the existing as well to generate new sources of income for providing better quality and improved public services. The move was also …


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