UAE VAT

Value added tax at 5%, introduced in January 2018. Registration is mandatory once taxable supplies exceed the mandatory threshold in a rolling twelve months, and available voluntarily above a lower one. Returns are filed quarterly or monthly depending on size.

Where it comes up

VAT arrives when your taxable supplies cross the mandatory threshold in any rolling twelve-month period — not your last financial year, which is where fast-growing businesses register late. A forward-looking thirty-day test applies as well.

What it costs

5% standard rate. Registration is free; late filing penalties escalate with repetition, which is the part that hurts.

Who it applies to

Businesses above the mandatory threshold must register; those above the lower voluntary threshold may, and often should where they carry significant UAE input VAT.

How it actually goes

1. Watch the thresholdRegistration is mandatory once taxable supplies exceed AED 375,000 in the previous twelve months, or are expected to in the next thirty days. Voluntary registration opens at AED 187,500.
2. Register on EmaraTaxLicence, MOA, bank details, customs code if you import, and a turnover declaration supported by invoices or contracts.
3. Charge and reclaim5% on standard-rated supplies; zero-rating and exemption apply to specific categories and are not interchangeable.
4. File on cycleQuarterly for most businesses, monthly above a turnover threshold set by the FTA. Payment is due with the return.
5. Keep the recordsFive years, and longer for real estate. The FTA can and does ask.

Zero-rated and exempt are not the same thing. Zero-rated supplies let you reclaim input VAT; exempt supplies do not, which quietly makes the exempt business the more expensive one to run.

In short

• 5% standard rate, with zero-rated and exempt categories
• Mandatory registration above the threshold; voluntary below it
• Late filing penalties escalate with repetition

Where this leads

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