What is VAT in UAE?
VAT or Value Added Tax in UAE was introduced on 1 January 2018, making UAE the 2nd country in the Gulf Cooperation Council group of countries. The UAE government has decided to implement VAT at a rate of 5%.
VAT is providing the UAE government with a source of income that is being utilized to provide high-quality public services. It is also helping the government in moving towards a vision of reducing dependency on oil and other hydrocarbons as a source of revenue.
- All you need to know about VAT in UAE
- Is VAT Certificate Mandatory in Dubai?
- What is Claimable VAT?
- The Implication of VAT on New Businesses in the UAE
- Guide for Value Added Tax on Designated Zones in the UAE
Impact of VAT in Dubai, UAE
At the start of the new VAT rule in UAE, several negative & positive impacts, challenges, and considerations were raised for the businesses & companies. Some of the major impacts of VAT in Dubai, UAE, are:
- Cost of goods increased
- Business structure changed
- Being accountable by keeping a record of all the transactions
- Uncertainty about the future
- Better infrastructure
- Enhancement to government reserves
- Improved business efficiency
- Impact of VAT on Businesses of UAE
- Impact of Voluntary Tax Registration on Businesses
- Effect of VAT on E-Gaming Industry in the UAE
- Effect of VAT on Newly Registered Companies
- Effect of VAT on the UAE Economy
- How VAT Will Affect the Property Sector in the UAE
VAT Rates in UAE
With the introduction of VAT in the UAE, a VAT rate of 5% was decided to be applicable to the delivery of goods and services in the country. Registered businesses in UAE are responsible for paying VAT @ 5% to the government. The general VAT Tax structure for the purpose of the levy is divided as follows:
VAT Rate Type in UAEVAT Rate
Standard Rate on Goods & Services5%
Zero-Rated & Exempted Supplies0%
- VAT Rates for Different Industries in the UAE as per Auditors in UAE
- What are Zero Rated VAT items in UAE
- VAT Regulations Are Affecting the Rate of FDI in UAE
- What is the Difference Between Zero-Rated VAT and Exempted VAT?
- Tax Update – Introduction of Corporate Tax In UAE
- VAT on Commercial Properties in the UAE
- VAT to Increase Restaurant Costs in the UAE
- VAT Paid on Entertainment Services in the UAE to Be Non-Recoverable
- The VAT on Transportation Services provided by Educational Institutions
- Application of VAT on the export of Services outside GCC Countries
VAT Registration in Dubai, UAE
A business in UAE must register for VAT if the taxable supplies and imports exceed the mandatory registration threshold of AED 3,75,000. Furthermore, a business may choose to voluntarily register for VAT where the total value of the taxable supplies and imports (or taxable expenses) exceeds the voluntary registration threshold of AED 1,87,500.
- How to Register your Company for VAT?
- VAT Registration Requirements to be Fulfilled in UAE
- Basic Requirements of VAT Registration in UAE
- How to Register for VAT as a Freelancer in UAE
- Procedures Related to Tax Registration and De-Registration Followed by Auditors in UAE
- Mandatory and Voluntary VAT registration in Dubai for Businesses
VAT De-Registration in Dubai, UAE
VAT De-Registration is the provision for a registered taxable person to cancel their VAT registration. It means the deactivation of a taxable person's registration and VAT number. VAT de-registration can be requested by a person registered under VAT or done by the FTA upon finding that a person meets the conditions for cancellation of registration.
A person registered under UAE VAT can request VAT De-Registration in the following 2 ways:
- The person stops making taxable supplies and does not expect to make any taxable supplies over the next 12-month period OR
- The person’s taxable supplies or taxable expenses incurred over a period of 12 consecutive months is less than the voluntary registration threshold (AED 187,500), and they do not anticipate crossing this threshold in the next 30 days
- A Guide to Tax Group De-Registration
- Why Is There a Need for De-Registration of a Tax Group?
- Steps in De-Registering a Tax Group
VAT Penalty in UAE
Administrative penalties are additional amounts payable by a person for breaching the provisions of the VAT Law in the UAE. The UAE cabinet has approved a list of administrative penalties that will be imposed on businesses for tax violations. Each fine or penalty will not be less than 500 AED and not more than three times the amount of the tax on the business in question.
- All About Tax Penalties
- VAT Penalties and Its Legal Actions
- Insights about VAT Penalties in the UAE
- How Approved Auditors Can Help in Tax Penalty Settlements
- UAE Tax Penalties Reduced
- What Are the Tax Evasion Penalties in the UAE?
All About VAT Refund in UAE
It is mandatory for all the registered businesses in UAE to file a VAT return providing the details of sales, purchases, output VAT & input VAT paid during the given tax period, where:
- The output VAT is the amount collected on sales
- Input VAT is paid to the supplier towards purchases/expenses.
And, when the input tax is greater than the output tax on a VAT return, the taxpayer can request a VAT refund after filing their VAT return.
- How Can Businesses Claim VAT Refund in the UAE
- VAT Refund Policies | All you need to Know About VAT Refund Policies
- Updates for VAT Refund for Business Visitors
- How Tourists Can Get a VAT Refund in the UAE
- What is Reverse Charge Mechanism for VAT in UAE?
Tax Registration Number
A TRN or Tax Registration Number is issued by FTA when you register for tax as a sole trader, trust, partnership, or company. It gets automatically sent to the registrant after the completion of UAE VAT registration.
TRN is a 15-digit unique number that an entity obtains after making VAT registration in the UAE. TRN number is issued once for a business, so even a company with different activities or branches will have only one TRN.
- What is Tax Registration/Identification Number & How to Apply for TRN in UAE
- Why does your Company require a Tax Registration Number (TRN) in the UAE?
- Reasons to avail for a Tax Registration Number
What is Excise Tax in UAE?
Excise tax is a form of indirect tax levied on specific goods which are typically harmful to human health or the environment. These goods are referred to as “excise goods.”
Below are the goods which are considered excise goods & applicable tax on those:
Excise GoodsRate of Excise Tax
Tobacco & Tobacco Products100%
Electronic Smoking Devices & Tools100%
Liquids used in Electronic Smoking Devices100%
- Everything you Need to Know About Excise Tax Law in the UAE
- What you need to know about Excise Tax in UAE
- What is the Purpose behind Levying Excise taxes in UAE?
- Commodities which will be affected due to Excise Tax in the UAE
What is Input Tax in UAE?
Input tax in UAE is the tax paid by a person when they buy any goods, avail of any services, or conduct an import under VAT. For example, when retailers purchase goods from wholesalers, they pay tax for the goods procured. The tax paid for the procurement of goods is known as input VAT.
A major VAT element in UAE can be recovered from the tax paid on inputs. This means a person can reduce the input tax eligible for recovery from the tax payable and only pay the balance amount as VAT.
- What do you mean by Recoverable Input VAT?
- Time Frame for Recovering Input Tax
- All about the Recovery of TAX
VAT Registration Consultant
Businesses or Companies need to choose the right VAT Consultancy Firm in Dubai, UAE, based on a slew of factors, including the experience of the VAT tax consultant, expertise in accounting & finance, VAT computation, VAT refunds, and filing VAT. An expert VAT consultant can smoothly verify reports, claim refunds, fill out forms, or handle any complex VAT-related issues.
- How to Choose a VAT Return Filing Consultant in Dubai-UAE?
- All you need to know before Choosing a VAT Return Filing Consultant
- Take Advantage of Skill & Experience of Trusted VAT Consultants
- How to Choose a VAT Return Filing Consultant in Dubai-UAE?
- Need for a Tax Consultant in UAE
- How can a Tax Consultant help your Business?