Value Added Tax (VAT) is an indirect consumption tax levied on the supply of goods and services at each stage of the supply chain. In the UAE, VAT was introduced on 1 January 2018 at a standard rate of 5% under Federal Decree-Law No. 8 of 2017 — making the UAE one of the first GCC countries to implement VAT.
VAT-registered businesses collect output VAT from customers on taxable sales and remit the net (output minus input VAT) to the FTA through a quarterly VAT return. The end consumer bears the final cost — businesses act as tax collectors on behalf of the government.
Mandatory: taxable supplies exceeding AED 375,000 per year. Voluntary: above AED 187,500 — beneficial to reclaim input VAT on startup costs. Late registration penalties start at AED 20,000.
Standard rate (5%): most UAE goods and services. Zero rate (0%): exports, international services, certain education and healthcare, first supply of new residential properties. Exempt: see VAT exemption.
Charge VAT on all standard and zero-rated supplies, issue FTA-compliant tax invoices, maintain VAT records for five years, file quarterly VAT returns, and pay any VAT due within 28 days of period end.
UAE VAT runs alongside Corporate Tax (CT) and excise taxes. Bookkeeping records must clearly distinguish VAT from non-VAT items to support accurate filings for both.
Finanshels provides end-to-end VAT compliance: registration, quarterly return filing, input VAT optimisation, FTA correspondence, and audit support. Start with our VAT filing service or explore our full VAT services.
