The UAE introduced Value Added Tax (VAT) at 5% on 1 January 2018. While 5% sounds modest, non-compliance — late registration, missed returns, incorrect invoicing — attracts steep penalties from the Federal Tax Authority (FTA). Here's everything you need to know.
UAE VAT Basics
- Rate: Standard rate 5%
- Authority: Federal Tax Authority (FTA) — tax.gov.ae
- Applies to: Most goods and services supplied in the UAE
- Exempt: Residential property, bare land, local passenger transport, financial services
- Zero-rated (0%): Exports, international transport, healthcare, education, precious metals
Who Must Register?
| Registration Type | Threshold | Deadline |
|---|---|---|
| Mandatory registration | AED 375,000 taxable supplies in 12 months | Within 30 days of crossing |
| Voluntary registration | AED 187,500 taxable supplies or expenses | Anytime |
| New business pre-registration | Expected to cross AED 375,000 in 30 days | Before crossing |
Important: The threshold applies across the entire GCC in some cases (if you trade with other GCC states). Don't wait until you're near the limit — late registration penalties start at AED 20,000.
Should You Register Voluntarily?
If your business is below AED 375,000 in turnover, voluntary VAT registration is often still a smart move:
- You can reclaim VAT on your business expenses (rent, equipment, professional fees)
- Some large corporate clients only deal with VAT-registered suppliers
- It signals legitimacy and scale to banks and partners
Downside: You must file quarterly returns and maintain compliant records — more admin burden for micro businesses.
How to Register for UAE VAT
- Create an e-Services account on tax.gov.ae
- Complete the VAT registration form (business details, activities, expected turnover)
- Upload supporting documents: trade licence, passport copies, bank account details, financial records
- Submit and await FTA review (typically 20 business days)
- Receive your Tax Registration Number (TRN)
We handle VAT registration as part of our accounting & tax service. We prepare the application, submit it, and follow up with the FTA until your TRN is issued.
VAT Invoicing Requirements
Every VAT invoice must include:
- The words "Tax Invoice" clearly stated
- Your TRN (Tax Registration Number)
- Invoice date and sequential invoice number
- Supplier and customer name and address
- Description of goods/services
- Net amount, VAT rate, VAT amount, and total amount
Filing VAT Returns
VAT returns are filed quarterly (some businesses monthly) through the FTA portal. The deadline is the 28th day of the month following the end of the tax period. Our accounting & tax team tracks deadlines and files on your behalf.
In each return you report:
- Output tax — VAT you collected from customers
- Input tax — VAT you paid on business purchases (reclaimed)
- Net VAT payable — output minus input
FTA Penalties to Know
| Violation | Penalty |
|---|---|
| Failure to register on time | AED 20,000 |
| Late VAT return filing | AED 1,000 first offence; AED 2,000 repeat |
| Late VAT payment | 2% of unpaid tax immediately; 4% monthly |
| Incorrect VAT return | 50%–300% of unpaid tax difference |
| Failure to issue valid tax invoice | AED 5,000 per invoice |
Let us handle your VAT registration & filing
We register your business, set up compliant invoicing, and file your quarterly returns — so you focus on growing.
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