VAT vs. Corporate Tax in the UAE: what is the difference?
VAT and Corporate Tax are two separate UAE taxes. VAT is 5% charged on your sales and ultimately paid by the customer. Corporate Tax is 9% on your company's annual profit above AED 375,000. You may have to register and file for both, separately.
What is VAT?
VAT (Value Added Tax) is a 5% consumption tax on most goods and services. You collect it from customers on your sales (output VAT), deduct the VAT you paid on expenses (input VAT), and pay the difference to the FTA, usually each quarter.
What is Corporate Tax?
Corporate Tax is a 9% tax on your business profit above AED 375,000 per year. It is based on what your company earns, not on individual sales, and is filed once a year.
The key differences at a glance
- VAT is on sales (5%); Corporate Tax is on profit (9%)
- VAT threshold is AED 375,000 turnover; Corporate Tax applies to profit above AED 375,000
- VAT is usually filed quarterly; Corporate Tax is filed annually
- VAT is paid by the customer; Corporate Tax is paid by the company
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Try free for 1 monthDo I need to register for both?
Possibly. Nearly all taxable businesses must register for Corporate Tax. You register for VAT once your turnover crosses AED 375,000. Many companies are registered for both and file them on different schedules.
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Frequently asked questions
Is VAT the same as Corporate Tax in the UAE?
No. VAT is a 5% tax on sales; Corporate Tax is a 9% tax on annual profit above AED 375,000. They are separate, with different filings.
Can I be registered for both VAT and Corporate Tax?
Yes, and many businesses are. You file VAT (usually quarterly) and Corporate Tax (annually) separately.
Which tax applies to my small business?
Corporate Tax applies to almost all businesses, but at 0% below AED 375,000 profit. VAT applies once your turnover passes AED 375,000.
Note: This article is for general information only and does not replace individual tax advice.
