A taxable supply is any supply of goods or services made by a registered business that is subject to VAT — at either the standard 5% rate or the zero rate (0%). The concept determines when a business must charge VAT and when it can reclaim input VAT.
Standard-rated (5%): most UAE goods and services — consulting, software, commercial real estate, retail. Zero-rated (0%): exports of goods and services, international transportation, newly constructed residential buildings, and certain educational and healthcare services. Both are taxable supplies — input VAT is recoverable on both.
An exempt supply is not subject to VAT and the supplier cannot reclaim input VAT on related costs — a real cash cost. Examples: residential rentals, bare land, some financial services. Zero-rated is different: input VAT is still recoverable.
A business must register for VAT when taxable supplies (standard + zero-rated) exceed AED 375,000 over 12 months or are expected to exceed that threshold in the next 30 days. Voluntary registration is available from AED 187,500.
Correctly classifying your supplies is the foundation of accurate VAT compliance. Finanshels reviews your revenue streams and ensures VAT returns are accurate. See our VAT services.
