UAE Taxes
Overview
This guide walks you through charging value added tax (VAT) as a UAE business owner, including registration, tax rates, and collecting VAT on goods and services.
VAT at a Glance
If you sell goods or provide services in the UAE, you are required to collect VAT from your customers. The standard VAT rate is 5% on taxable supplies.
| Category | VAT Rate | Examples |
|---|---|---|
| Standard rated | 5% | Most goods and services |
| Zero rated | 0% | Exports, international transport, certain healthcare and education services |
| Exempt | N/A | Some financial services, residential property |
How to Charge VAT
Follow these steps to collect VAT correctly:
- Register for VAT — Register with the Federal Tax Authority (FTA) if your taxable supplies exceed the mandatory registration threshold of AED 375,000 per year. Voluntary registration is available if supplies exceed AED 187,500.
- Determine the tax category — Identify whether each product or service you sell is standard rated (5%), zero rated (0%), or exempt using the table above.
- Calculate the VAT amount — Apply the 5% rate to the taxable value of standard-rated supplies. For example, a product priced at AED 100 carries AED 5 in VAT for a total of AED 105.
- Issue a tax invoice — Include your Tax Registration Number (TRN), the VAT amount, and the total price on every invoice.
- File your VAT return — Submit your VAT return to the FTA by the deadline specified for your tax period (typically quarterly).
Troubleshooting
I'm unsure whether my supply is standard rated or zero rated
Review the FTA's published list of zero-rated and exempt supplies. When in doubt, consult a tax advisor — misclassifying a supply can result in penalties.
My taxable supplies are near the registration threshold
Track your rolling 12-month revenue closely. If you expect to exceed AED 375,000 within the next 30 days, you must register before crossing the threshold.
I charged the wrong VAT amount on an invoice
Issue a corrected tax credit note referencing the original invoice, then reissue a new invoice with the correct VAT amount. Report the adjustment in your next VAT return.
Next Steps
Updated 1 day ago