VAT UAE Guide

Read our guide and find out all you need to know about VAT in UAE, from registration to filing, and more.

If you’re thinking of expanding your business into the United Arab Emirates (UAE), you need to have a good grasp of the country’s VAT (Value Added Tax) system. This guide offers essential insights into the UAE VAT framework, helping you to effectively manage this aspect of your business operations in the UAE.

What is the UAE VAT rate?

The UAE only introduced VAT in 2018, and the current standard UAE VAT rate, applied to most goods and services, is 5%. There is also a 0% UAE VAT rate, which applies to a limited number of goods and services.

Type of VAT	VAT Rate	Applicable Goods/Services
Standard VAT rate	5%	Applies to almost all taxable goods and services.
Zero VAT rate	0%	Includes exports, international passenger transport, supply of crude oil/natural gas, and public education.

Registering for VAT in UAE

The UAE VAT registration threshold for resident businesses is AED 375,000 in annual taxable turnover. Businesses exceeding this threshold must register for UAE VAT. The voluntary registration threshold is AED 187,500. There is no registration threshold for non-resident businesses.

UAE VAT registration can be done electronically via the UAE Federal Tax Authority (FTA). Once your application has been submitted, it usually takes between two and three weeks to receive your VAT number UAE.

Fiscal representative in the UAE

When registering for VAT in UAE, foreign companies are required to appoint a fiscal representative. This representative will be jointly responsible for ensuring compliance with VAT laws in the UAE.

UAE VAT return filing and penalties

Businesses are typically required to file a UAE VAT return every quarter, although the FTA may request monthly filings under certain circumstances. VAT returns and payments are due on the 28th of the month following the end of the reporting period. UAE VAT returns should be submitted electronically via the FTA Portal.

Missed VAT return deadlines will result in a fine of AED 1,000. If multiple violations occur within 24 months, the fine will be doubled to AED 2,000. Failure to pay UAE VAT by the deadline will incur penalty interest of 2% with interest of 4% added for every month the amount remains unpaid.

Reverse charge in the UAE

The reverse charge mechanism primarily applies to VAT-registered businesses in the UAE. This mechanism is used for transactions where goods or services are imported from outside the GCC (Gulf Cooperation Council) to the UAE. In such cases, the responsibility for reporting the VAT transaction shifts from the seller to the buyer.