Value Added Tax (VAT) was introduced in the UAE on 1 January 2018 at a standard rate of 5%. It applies to most goods and services supplied within the UAE by VAT-registered businesses. Understanding the registration thresholds, filing obligations, and compliance requirements is essential for every UAE business owner.
VAT Registration Thresholds
| Threshold Type | Taxable Turnover | Action |
|---|---|---|
| Mandatory Registration | AED 375,000+ | Must register immediately |
| Voluntary Registration | AED 187,500+ | May register to recover input VAT |
What Is Taxable Under UAE VAT?
- Standard rated (5%): Most goods and services, hotel accommodation, restaurants, and professional services
- Zero rated (0%): International transport, certain healthcare and education services, exports outside the GCC
- Exempt (no VAT, no input VAT recovery): Residential property resale, local transport, bare land transactions
How to Register for VAT
- Create an account on the FTA EmaraTax portal
- Complete the VAT registration form with details of taxable supplies and business activities
- Upload supporting documents — trade license, passport copy, financial records
- FTA reviews and issues a Tax Registration Number (TRN) — typically within 20 business days
VAT Filing and Payment
Most UAE businesses file VAT returns quarterly, due within 28 days of the end of each tax period. Late filing attracts penalties: AED 1,000 for first offence, AED 2,000 for repeat offences, plus a 2% monthly penalty on unpaid tax.
Input VAT Recovery
Registered businesses can recover the VAT paid on business-related purchases (input VAT), offsetting it against VAT collected on sales (output VAT). Accurate record-keeping is essential to support input VAT claims.