VAT in the UAE: Value Added Tax (5%) simply explained
Since 2018 the UAE has levied a value added tax (VAT) of 5%. It's low, but the obligations around registration, invoicing and timely filing are often underestimated. Here you get the key points, compact and practical.
When do I have to register for VAT?
Registration is mandatory as soon as your taxable turnover over the last 12 months exceeds AED 375,000, or you expect to exceed this threshold within the next 30 days.
From a turnover of AED 187,500 voluntary registration is possible. This makes sense if you can reclaim a lot of input VAT from expenses.
Which VAT rates exist?
- 5% standard rate on most domestic supplies of goods and services.
- 0% (zero-rated), e.g. for certain exports and international services.
- Exempt, e.g. for certain financial services and residential real estate.
Reverse charge on foreign services
If you purchase services from abroad (e.g. Meta or Google ads, software subscriptions), the reverse charge mechanism often applies: you account for the 5% yourself (output) and deduct it as input VAT at the same time. This is usually payment-neutral but must be reported in the VAT201.
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Try free for 1 monthDeadlines and filing (VAT201)
The VAT return (VAT201) is usually filed quarterly via the EmaraTax portal. The deadline ends 28 days after the end of the tax period. Late filing or payment leads to penalties.
Frequently asked questions
What happens if I miss registration?
A late VAT registration can lead to penalties. Once you exceed the AED 375,000 threshold, you have 30 days to register.
Do I have to show VAT on invoices?
Yes, registered businesses must show the TRN and the VAT amount on taxable invoices. EmiraBooks does this automatically.
Note: This article is for general information only and does not replace individual tax advice.
