VAT in the UAE

Value Added Tax (VAT) is a type of indirect tax imposed on goods and services that are bought and sold for use or consumption. In the UAE, VAT was introduced on January 1, 2018, at a standard rate of 5%. The Federal Tax Authority (FTA) is responsible for the administration and collection of VAT in the UAE.

Threshold to register for VAT

Businesses in the UAE are required to register for VAT if their taxable supplies and imports exceed the mandatory registration threshold, which is AED 375,000 per year. There is also a voluntary registration threshold set at AED 187,500 per year, allowing businesses with taxable supplies and imports below the mandatory threshold to register for VAT voluntarily.

Local Sales

Local sales refer to transactions of goods and services within the UAE that are subject to the standard VAT rate of 5%. Businesses must charge VAT on all taxable supplies and can reclaim VAT incurred on their purchases. For example:

  • Retail sales of products within the UAE.
  • Provision of services such as consulting, legal, or accounting within the UAE.
  • Supply of goods and services to other businesses or consumers within the UAE.

It is essential for businesses to issue valid tax invoices and maintain proper records of all local sales transactions to comply with VAT regulations.

Zero-Rated Sales

Zero-rated sales are taxable supplies of goods and services that are subject to a VAT rate of 0%. While no VAT is charged on these sales, businesses can still reclaim the input VAT incurred on related expenses. Common examples of zero-rated sales include:

  • Export of goods and services to countries outside the GCC region.
  • International transportation of passengers and goods.
  • Certain educational and healthcare services.

Businesses must ensure that they have the necessary documentation to support zero-rated sales, such as export declarations and proof of transportation, to claim input VAT.

Exempt Sales

Exempt sales refer to supplies of goods and services that are not subject to VAT. Businesses making exempt supplies cannot charge VAT on these sales and are not entitled to reclaim the input VAT incurred on related expenses. Examples of exempt sales include:

  • Supply of residential properties after the first sale or rent.
  • Supply of financial services, such as loans and mortgages.
  • Local passenger transport services.

It is important for businesses to distinguish between zero-rated and exempt sales, as the VAT implications differ significantly.

VAT Invoices

Businesses must issue VAT invoices for all taxable supplies, including local and zero-rated sales. The invoice should include:

  • Supplier’s name, address, and TRN (Tax Registration Number).
  • Customer’s name and address.
  • Description of goods or services supplied.
  • Quantity and unit price.
  • VAT amount and rate applied.

Record Keeping

Proper record-keeping is essential for VAT compliance. Businesses must retain all invoices, receipts, and relevant documentation for a period of five years. This includes records of local sales, zero-rated sales, and exempt sales.

Required Documents for VAT Registration

  • Trade License ( You need to provide a copy of your current trade license. This document proves that your business is legally recognized and allowed to operate in the UAE. )
  • Certificate of Incorporation
  • Passport Copies
  • Emirates ID
  • Contact Information
  • Bank Account Details
  • Business Activities
  • Financial Statements
  • Customs Registration

Why Choose Us

Expertise:

Our team comprises experienced VAT specialists who stay updated with the latest regulatory changes.

Customized Solutions:

We understand that each business is unique. Our solutions are tailored to meet your specific needs.

Compliance Assurance:

We ensure that your business meets all VAT requirements, minimizing the risk of non-compliance penalties.

Efficient Processes:

Our streamlined processes save you time and effort, allowing you to focus on your core business activities.