UAE VAT guide
Value Added Tax came to the UAE on 1 January 2018 at a standard rate of 5% (Federal Decree-Law No. 8 of 2017). It is a consumption tax: businesses collect it on their sales and hand it to the Federal Tax Authority (FTA), recovering the VAT they paid on their own purchases along the way. The cost lands with the final consumer.
The basics for consumers
- Most prices you see in shops should already include VAT. If a price is quoted "plus VAT", add 5%.
- A receipt showing AED 105 contains AED 5 of VAT: net = 105 ÷ 1.05 = 100. Our VAT calculator does this both ways.
- Every VAT-registered seller must issue a tax invoice showing their TRN (Tax Registration Number) and the VAT amount.
Who must register
| Annual taxable supplies and imports | Registration |
|---|---|
| Above AED 375,000 | Mandatory |
| AED 187,500 to 375,000 | Optional |
| Below AED 187,500 | Not permitted |
Non-UAE businesses making taxable supplies in the UAE must register regardless of turnover. Registration is done through the FTA's eServices portal.
Zero-rated vs exempt - they are not the same
- Zero-rated (0%) supplies are still taxable supplies, so the seller can recover the VAT on related costs. Examples: exports of goods and services outside the GCC, international transport, certain education and healthcare services, the first supply of new residential buildings.
- Exempt supplies carry no VAT but the seller cannot recover input VAT on related costs. Examples: bare land, local passenger transport, residential property (after the first supply), some financial services.
Tourist refunds
Tourists pay VAT like everyone else but can claim it back on eligible purchases (over AED 250 from participating retailers) when leaving the UAE, through the Planet tax-free kiosks at airports and exit points. Bring the receipts and the goods.
Penalties worth knowing
Late registration, late filing and late payment all carry fixed and percentage-based penalties under the FTA's penalty regime, so small businesses crossing the AED 375,000 threshold should not delay registration.
Sources
General information, not tax advice. Rules and guides are updated by the FTA - confirm your obligations with the FTA or a registered tax agent.