What is VAT in the UAE?

VAT in the UAE is a 5% tax on the consumption of most goods and services, in force since 1 January 2018. Registered businesses collect it from customers and pay it to the Federal Tax Authority.

What is the meaning of Value Added Tax, with an example?

VAT is a tax charged at each stage of the supply chain on the value added. A shop buys a product for AED 100 plus AED 5 VAT, sells it for AED 200 plus AED 10 VAT, and pays the FTA the AED 5 difference.

What is the current VAT rate in the UAE?

The standard rate is 5%. Some supplies, such as exports and international transport, are zero-rated at 0%, and some, such as residential rent and bare land, are exempt.

How do I register for VAT in the UAE?

Online through EmaraTax: create an account, set up a taxable person profile, complete the VAT registration form and upload the trade licence, IDs and turnover evidence. The FTA charges no fee and processes the application within 20 business days.

What is the difference between mandatory and voluntary VAT registration?

Registration is mandatory when taxable supplies and imports exceed AED 375,000. It is optional between AED 187,500 and AED 375,000, and for voluntary registration taxable expenses also count.

What is the difference between VAT and Corporate Tax in the UAE?

VAT is a 5% tax on sales, paid by the end customer and filed quarterly or monthly. Corporate Tax is 9% on company profits above AED 375,000, paid by the business and filed once a year.

What is input tax under UAE VAT?

Input tax is the VAT a registered business pays on its purchases and imports. It can usually be deducted from output tax, except on blocked costs such as client entertainment, or costs linked to exempt supplies.

What records must businesses maintain under UAE VAT?

Tax invoices and credit notes, import and export documents, accounting records, contracts and bank statements, kept for at least five years after the end of the tax period. Real estate records must be kept longer.

Can I claim a VAT refund for exports from the UAE?

Yes. Exports are zero-rated, so no VAT is charged but input tax on related costs can still be recovered. If input tax exceeds output tax, the difference can be claimed as a refund through form VAT311 in EmaraTax.

Do Free Zone companies pay VAT?

Yes. Free Zone companies register, charge and pay VAT like Mainland companies. Only goods moved within or between Designated Zones get special treatment; services are always taxed at 5%.

How often do UAE VAT returns need to be filed?

Quarterly for most businesses, and monthly for businesses with annual turnover of AED 150 million or more. Each return and payment is due within 28 days of the end of the tax period.

What happens if a business does not register for VAT on time?

The FTA charges an AED 10,000 penalty for late registration. The business also owes the VAT it should have charged from the date registration was required, plus penalties on any late returns and payments.

Do foreign (non-resident) businesses need a fiscal representative in the UAE?

No. UAE VAT doesn't require a fiscal representative. A non-resident business can register directly with the FTA or appoint an FTA-registered tax agent to handle its VAT on its behalf.

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Ultimate guide to VAT in the UAE 2026

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Anastasia Davydova

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⏱ 4 min read

Oct 1, 2026

When people think about taxes in the UAE, Corporate Tax usually comes first. But VAT touches almost every business in the Emirates, and it has more nuances than most owners expect. In this guide we've put them all in one place, so you get the full picture without reading the law yourself.

Key takeaways

VAT in the UAE is a 5 % consumption tax on most goods and services, in force since 1 January 2018 under Federal Decree-Law No. 8 of 2017.
You must register once your taxable supplies and imports exceed AED 375,000 in 12 months. Above AED 187,500 you may register voluntarily.
Registered businesses charge VAT, file returns with the Federal Tax Authority (FTA), and the end customer bears the cost.

Why it's important to understand VAT in the UAE

Nearly every business in the UAE deals with VAT, and 2026 has brought several changes you need to know about. From 1 October 2026, a valid tax invoice is no longer enough to recover VAT: you also have to show that you checked the supplier and the supply. An updated VAT Executive Regulation takes effect on the same day, and the last chance to reclaim old VAT credits closes on 31 December 2026.

Let's start from the beginning: what VAT is and how it works in the UAE.

What is Value Added Tax?

Value Added Tax (VAT) is a consumption tax. It is charged at every step of the supply chain, but each business pays tax only on the value it adds. In the end, the final customer carries the full cost.

A simple example:

A manufacturer sells fabric to a tailor for AED 1,000 plus AED 50 VAT.
The tailor sells a finished suit for AED 2,000 plus AED 100 VAT. The tailor pays the FTA AED 50: the AED 100 collected minus the AED 50 already paid to the manufacturer.
The customer pays AED 2,100 and can't recover anything.

The FTA receives AED 100 in total (AED 50 from each business), which is exactly 5 % of the final price. The businesses act as tax collectors; the customer is the one who pays.

How VAT works in the UAE

The UAE introduced VAT on 1 January 2018 under Federal Decree-Law No. 8 of 2017, as part of a common VAT framework agreed by the Gulf Cooperation Council (GCC) states. The detailed rules sit in the Executive Regulation (Cabinet Decision No. 52 of 2017), and the FTA administers the tax through its online portal, EmaraTax.

For a registered business, the cycle looks like this:

Output tax. You add 5 % VAT to your taxable sales and collect it from customers.
Input tax. You pay VAT on business purchases and imports, and you can usually deduct it.
VAT return. At the end of each tax period, you report both amounts. If output tax is higher, you pay the difference. If input tax is higher, you carry the excess forward or ask for a refund.

When you buy services from abroad or import goods, there is often no UAE supplier to charge you VAT. Under the reverse charge mechanism, you account for the VAT yourself in your return and, in most cases, deduct it in the same return, so the net cost is zero. The same mechanism applies to some domestic trades that are prone to fraud: gold and diamonds, electronic devices and, since 14 January 2026, scrap metal.

Which goods and services are subject to VAT in the UAE?

The default rule is simple: every supply of goods or services made in the UAE is taxed at 5 %, unless the law says otherwise.

In practice, the standard rate covers most of daily business life:

Consulting, marketing, IT, legal and accounting services.
Retail goods, cars, electronics and furniture.
Commercial rent, hotels, restaurants and events.
Imports of goods and services.

There are three types of exceptions: zero-rated supplies (taxed at 0 %), exempt supplies (no VAT at all) and supplies that are out of scope. The difference between the first two matters more than most owners realise, because it decides whether you can recover VAT on your costs.

VAT rate in the UAE

The standard rate has been 5 % since 1 January 2018 and hasn't changed. It remains one of the lowest VAT rates in the world.

Not sure whether your product or service is exempt from UAE VAT?

We can check it for you and answer any other VAT questions you have.

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Types of supplies under UAE VAT Law

Taxable supplies

A taxable supply is any supply on which VAT is charged, whether at 5 % or at 0 %. Both count towards the registration threshold, and both let you recover input tax on related costs.

Zero-rated supplies

Zero-rated supplies are taxable, but the rate is 0 %. Article 45 of the VAT Law lists them, including:

Exports of goods and services to outside the GCC implementing states. No GCC country has been recognised as an implementing state yet, so today a sale to Saudi Arabia is treated as an ordinary export.
International transport of passengers and goods, and related services.
Investment precious metals (gold, silver and platinum of 99 % purity).
The first supply of a residential building within three years of completion.
Crude oil and natural gas.
Qualifying education services and preventive and basic healthcare services, with related goods.

Zero-rating requires proof. For example, exported goods must physically leave the UAE within 90 days, and you must keep customs and commercial documents. We explain the details in our guide to exports and imports under UAE VAT.

Exempt supplies

Exempt supplies carry no VAT, and you can't recover the VAT you paid on costs linked to them. Article 46 covers:

Financial services that are not charged through an explicit fee, such as interest on loans.
Residential buildings, other than the zero-rated first supply.
Bare land.
Local passenger transport.

Two more categories were added by Cabinet Decision No. 100 of 2024:

Transfers and conversions of virtual assets (retroactively from 1 January 2018).
Management of licensed investment funds (from 15 November 2024).

For a full breakdown, see who is exempt from VAT in the UAE.

Out-of-scope supplies

Some transactions sit outside the VAT system altogether: they are neither taxed nor exempt. Common examples are salaries paid to employees, dividends, the transfer of a whole business as a going concern, and sales by a business that isn't registered for VAT. Out-of-scope income doesn't count towards the registration threshold.

Designated Zones and VAT on goods

A Designated Zone is a fenced area with special VAT rules and strict control over the movement of goods in and out. Under Article 51 of the VAT Law, these zones are treated as outside the UAE for certain movements of goods:

Goods moved between Designated Zones, or sold within the same zone, are usually outside the scope of VAT, as long as they stay under customs control and the other conditions are met.
Goods moved from a Designated Zone to the Mainland are treated as an import, so 5 % VAT applies.
Services supplied in a Designated Zone are taxed at 5 %, like anywhere else.

Don't confuse Free Zones with Designated Zones. A Free Zone licence by itself does not change your VAT position: a Free Zone company registers, charges and pays VAT like any other business. Only goods kept under customs control in a Designated Zone get special treatment. We've put together a detailed guide on this topic — worth reading before you decide anything.

We advise on all VAT matters and help with the paperwork. Book an introductory call and we'll show you how we can support your business in the UAE.

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Who must register for VAT in the UAE

Mandatory VAT registration threshold

You must register if the value of your taxable supplies and imports:

exceeded AED 375,000 in the previous 12 months

OR

is expected to exceed AED 375,000 in the next 30 days.

The application is due within 30 days of reaching the threshold. Many businesses forget the forward-looking test: one large signed contract can trigger registration before a single dirham arrives. Keep this in mind to avoid a penalty.

Voluntary VAT registration threshold

You may register voluntarily if your taxable supplies, imports or expenses exceeded AED 187,500 in the previous 12 months, or if you expect them to exceed that amount within the next 30 days.

Start-ups may benefit from counting expenses: you can register before your first sale and recover VAT on setup costs, such as fit-out and equipment. The trade-off is that you take on quarterly returns and all other VAT obligations from day one.

Voluntary VAT registration threshold

You may register voluntarily if your taxable supplies, imports or expenses exceeded AED 187,500 in the previous 12 months, or if you expect them to exceed that amount within the next 30 days.

Start-ups may benefit from counting expenses: you can register before your first sale and recover VAT on setup costs, such as fit-out and equipment. The trade-off is that you take on quarterly returns and all other VAT obligations from day one.

Do non-resident businesses need to register?

Yes, in many cases, and without any threshold.

How to register for VAT in the UAE (step by step)

Registration takes place online on EmaraTax, and the FTA charges no fee for it. The FTA says the form takes around 45 minutes, and a complete application is processed within 20 business days.

Create an EmaraTax account with your email or UAE Pass.
Create or select a Taxable Person profile for your business.
Click "Register" on the VAT tile to open the application.
Enter entity and licence details: legal form, trade licence, and owners or partners.
Complete the eligibility section: turnover for the past 12 months, expected turnover for the next 30 days, and any imports or exports.
Add contact details, bank details and the authorised signatory.
Upload the documents as PDF files (up to 15 MB each).
Review, sign the declaration and submit.

Documents to prepare:

Trade licence or Certificate of Incorporation.
Emirates ID and passport copies of the owners and the authorised signatory.
Memorandum of Association (MoA) or other ownership documents.
Proof of authority for the signatory, such as a power of attorney.
A turnover declaration with supporting invoices or contracts.
Bank account details (IBAN letter).
Customs registration details, if you import or export.

Most delays come from mismatched names, missing signatory documents, or turnover figures the FTA can't match to evidence. For more on the number you get at the end, see how to apply for a Tax Registration Number (TRN) in the UAE.

Close to AED 375,000, or not sure whether your sales count towards the threshold? We check your figures, prepare the documents and handle the EmaraTax application for you, including any follow-up questions from the FTA.

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What is a UAE VAT number?

A UAE VAT number is another name for the Tax Registration Number (TRN). It is the 15-digit number the FTA issues when it approves your VAT registration. It must appear on every tax invoice and tax credit note you issue and on every VAT return you file. Three practical routines to follow with this number:

Check your suppliers' TRNs. The FTA website has a TRN verification tool, and from 1 October 2026 this check is part of the required supplier due diligence.
VAT and Corporate Tax are separate registrations with separate TRNs. The first 10 digits of your TRN form your Tax Identification Number (TIN), which the e-invoicing system also relies on.
Your VAT certificate shows the TRN, your registration date and your tax periods. You can find it in EmaraTax: here is how to download the VAT certificate.

Need help getting any documents in the UAE? Contact us — we'll take care of it quickly and at a clear, agreed price.

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VAT invoicing and documentation requirements

Under Article 59 of the Executive Regulation, a full tax invoice must show:

The words "Tax Invoice", clearly displayed.
The supplier's name, address and TRN.
The customer's name, address and TRN, if the customer is registered.
A sequential invoice number.
The date of issue, and the date of supply if different.
A description of the goods or services.
For each line: unit price, quantity, VAT rate and the amount payable in AED.
Any discount.
The total amount payable and the total VAT in AED, with the exchange rate if you invoice in another currency.
For reverse charge supplies, a statement that the customer must account for the VAT.

You must issue a tax invoice within 14 days of the date of supply. A simplified tax invoice, with fewer details, is allowed when the customer is not registered, or when the customer is registered and the supply is worth AED 10,000 or less.

Invoicing is about to change again. Under the national e-invoicing system, large businesses (revenue of AED 50 million or more) must appoint an Accredited Service Provider (ASP) by 30 October 2026 and go live on 1 January 2027. Everyone else appoints an ASP by 31 March 2027 and goes live on 1 July 2027. We explain the mechanics in our UAE e-invoicing guide.

Record-keeping requirements

Every registered business must keep records that let the FTA check each figure in its returns:

Tax invoices and tax credit notes issued and received.
Import and export documents, including customs declarations.
Records of goods and services used for non-business purposes.
Purchase records where input tax was not recovered.
Accounting records, contracts, bank statements and correspondence behind the entries.

Keep VAT records for at least five years after the end of the tax period they relate to. Real estate records have longer periods, up to 15 years, and since 1 April 2026, records for periods with a pending refund claim must be kept two years longer. The FTA can ask for records in Arabic, and failing to provide them costs AED 5,000.

How do VAT refunds work in the UAE?

A refund arises when your input tax is higher than your output tax in a tax period. This is typical for exporters, businesses in their first months, or companies that buy expensive equipment. You then have two options:

Carry the credit forward and offset it against VAT due in later periods.
Apply for a refund by submitting form VAT311 in EmaraTax. The FTA decides within 25 business days, or up to 55 business days if it needs to audit the claim.

Credits no longer last forever. Since 1 January 2026, excess input tax can only be carried forward or refunded within five years of the end of the tax period. If your credits have already expired, or will expire by the end of 2026 (tax periods that ended before 1 January 2022), you can still claim them until 31 December 2026. If you have credits from 2018 to 2021 sitting in EmaraTax, this is the time to act.

Other refund schemes exist outside the VAT return:

Tourists get back 85 % of the VAT on purchases of at least AED 250 from participating retailers.
Foreign businesses that are not registered and don't do business in the UAE can reclaim VAT through the Business Visitor refund scheme.
UAE nationals building a new home can reclaim VAT on the construction costs.

Get a refund

VAT return filing deadline

Most businesses file quarterly; businesses with annual turnover of AED 150 million or more file monthly. The return is due within 28 days of the end of each tax period. For a quarter ending 30 September 2026, that means 28 October 2026.
Your exact tax periods are on your VAT certificate, and our UAE tax and compliance calendar tracks them alongside Corporate Tax and audit deadlines.

You must file a return for each period, even if you made no sales.

VAT payment deadline

VAT due is payable by the same date as the return: the 28th day after the end of the tax period.

You can pay through EmaraTax by bank transfer or card. Bank transfers can take a few days to reach the FTA, so pay early: the late payment penalty starts the day after the deadline.

VAT is not difficult, but it has to be done every quarter, on time and with clean books behind it. We keep your records, prepare and file each return, and tell you what to pay and when, so a deadline never catches you by surprise.

Put your records in order

How is VAT calculated in the UAE? (With example)

The basic formula for each sale is:
VAT = price excluding VAT × 5 %

For a service worth AED 20,000, VAT is AED 1,000 and the customer pays AED 21,000.

If you only know the VAT-inclusive price, divide by 21:
VAT = price including VAT × 5 ÷ 105

For a VAT-inclusive price of AED 1,050, VAT is AED 50. This matters for retailers: prices shown to consumers in the UAE must include VAT.

For the return itself:
VAT payable = output tax − recoverable input tax.

Input tax and output tax: a worked example

A Dubai trading company files its return for the quarter from 1 July to 30 September 2026.

The calculation:

Output tax: AED 20,000 + AED 1,000 = AED 21,000
Recoverable input tax: AED 12,500 + AED 1,500 + AED 1,000 = AED 15,000
VAT payable: AED 21,000 − AED 15,000 = AED 6,000, due by 28 October 2026

Common VAT mistakes and penalties in the UAE

Registering late.

Businesses often count only past sales and ignore imports or the 30-day test. The result: an AED 10,000 penalty.
Issuing incomplete invoices.

A missing TRN or the wrong wording can cost your customer their input tax, and failing to issue a tax invoice costs you AED 2,500 per case.
Recovering blocked input tax.

VAT on client entertainment or cars available for private use is usually not recoverable. Claiming it leads to a correction and penalties.
Zero-rating exports without evidence.

Without customs and commercial proof, the FTA treats the sale as standard-rated, and you lose 5 % of your margin.
Letting credits expire.

Unclaimed credits now lapse after five years.
Assuming a Free Zone means no VAT.

Most Free Zone companies charge and pay VAT exactly like Mainland companies.
Skipping supplier checks.

From 1 October 2026, the FTA can deny input tax if you can't show you checked the supplier.

VAT advice in the UAE

Not every VAT question needs a full service. Sometimes you need a clear, legally sound answer to one specific question: Is a new contract zero-rated? Does a Free Zone setup change your position? How should a mixed supply be treated?

A one-off session with us covers these and gives you an answer you can act on. We also help with voluntary disclosures, FTA audits and clarification requests, and VAT reviews before a sale or restructuring.

We have helped over 400 companies set up in the UAE and saved them more than AED 5 million in potential fines along the way. Why don't we get to know each other?

Anastasia Davydova

CEO at movingo

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Penalties for VAT non-compliance in the UAE

Administrative penalties are set by Cabinet Decision No. 40 of 2017, as amended. The latest amendment took effect on 14 April 2026 and made several penalties lighter, most notably for late payments.

For a closer look at how the late payment charge adds up, see our article on the penalty for late payment of VAT.

VAT for Free Zone companies

Free Zone companies follow the same VAT rules as Mainland companies. The 0 % Corporate Tax rate for Qualifying Free Zone Persons has nothing to do with VAT: a Free Zone company that sells services worth more than AED 375,000 a year must register, charge 5 % and file returns like any other business.

The only VAT-specific difference applies to goods in Designated Zones (see above). Services are taxed at 5 % in every zone, and goods that move from a Designated Zone to the Mainland are treated as imports. If your Free Zone licence includes trading activity, check whether your zone is on the Designated Zone list and whether your goods stay under customs control.

For the practical steps, see VAT registration for Free Zone companies in the UAE.

VAT vs Corporate Tax: what is the difference?

Both taxes are run by the FTA through EmaraTax, but they tax different things and follow separate rules.

The AED 375,000 figure appears in both laws, but it means different things: a sales threshold for VAT registration, and a profit band taxed at 0 % for Corporate Tax. Small Business Relief applies only to Corporate Tax and doesn't change your VAT obligations. For the full picture, read our ultimate guide to Corporate Tax in the UAE.

Recent changes: UAE VAT Law amendments effective January 2026

2026 brought a long list of VAT changes. According to the Ministry of Finance, the amendments "aim to simplify tax procedures for taxpayers while ensuring transparency and compliance with international standards." Here is what changed and when.

1 January 2026: amendments to the VAT Law

Federal Decree-Law No. 16 of 2025 removed the need to issue self-invoices under the reverse charge, introduced a five-year limit for using excess input tax, and allowed the FTA to deny input tax on supplies linked to tax evasion.
14 January 2026: reverse charge on scrap metal

Cabinet Decision No. 153 of 2025 moved VAT on scrap metal trades between registered businesses to the buyer.
14 April 2026: lighter administrative penalties

Cabinet Decision No. 129 of 2025 replaced the old late payment penalties with a single rate of 14 % per year, charged monthly, and replaced the tiered penalty for errors fixed by voluntary disclosure with 1 % per month.
1 October 2026: supplier checks before recovering input tax

Under FTA Decision No. 13 of 2026, businesses must verify the supplier and the supply before deducting input tax, with deeper checks once a supplier passes AED 375,000 a year. Read the details in our news on the new due diligence rules.
1 October 2026: updated Executive Regulation

Cabinet Decision No. 149 of 2026 blocks input tax on high-value cash purchases (the threshold is still to be set by the Minister of Finance), adds a rule for composite supplies, and updates the treatment of healthcare goods and employee accommodation. The new input tax apportionment method applies from the first tax year starting after 1 October 2027.
31 December 2026: last day to claim old credits

Businesses whose excess input tax has expired, or will expire within a year of 1 January 2026, can still claim a refund or offset until 31 December 2026.

How movingo helps with VAT in the UAE

We take VAT off your plate, from the first question to the last return, at a fixed price agreed upfront:

Introductory call

We look at your activity and figures and tell you whether you need to register, and from when.
Registration

We prepare the documents, submit the application on EmaraTax and handle any FTA requests until you get your TRN.
Setup

We configure VAT codes and invoice templates in your accounting software, so every invoice meets the requirements.
Quarterly routine

You send us bank statements and invoices; we reconcile them, prepare and file the return, and tell you exactly what to pay before the 28th.
Ongoing support

Supplier checks, refund claims, voluntary disclosures and FTA audits, handled by the same team that knows your books.

VAT registration starts from AED 500, and ongoing VAT filing is included in our accounting packages from AED 500 per month.

Accounting: financial order for businesses and freelancers.
Taxes: meeting deadlines, compliance, avoiding penalties.
Bookkeeping: clean data, ready for your VAT return.

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Disclaimer
This guide provides general information based on UAE laws and Federal Tax Authority (FTA) guidance as of 23 September 2026. It is not legal or tax advice. VAT rules change often and depend on the specifics of each situation, so please speak to a professional before you act.

Sources

Federal Decree-Law No. 8 of 2017 on Value Added Tax: the VAT Law.
Cabinet Decision No. 52 of 2017: the Executive Regulation of the VAT Law.
Cabinet Decision No. 40 of 2017 and its amendments, including Cabinet Decision No. 129 of 2025: administrative penalties.
Ministry of Finance: VAT Law amendments from January 2026: Federal Decree-Law No. 16 of 2025.
Ministry of Finance: Tax Procedures Executive Regulation amendments from April 2026.
Ministry of Finance: reverse charge on scrap metal: Cabinet Decision No. 153 of 2025.
FTA: VAT legislation, including FTA Decision No. 13 of 2026 and the Designated Zones list.
FTA: registration for VAT and the VAT registration service.
FTA: refund of excess amounts to registrants and VAT refunds for business visitors.
u.ae: filing VAT returns and VAT refunds for tourists.
Baker McKenzie: VAT Executive Regulation amended: Cabinet Decision No. 149 of 2026.
Alvarez & Marsal: amendments to the UAE VAT Law and Tax Procedures Law.

Reviewed by Zarifa Alieva, ACCA — Chief Accountant and Senior Corporate Tax Consultant at movingo, KHDA-approved UAE tax specialist with expertise in Corporate Tax compliance, FTA VAT registration and reporting, IFRS financial reporting, and audit & assurance for Free Zone and Mainland businesses in Dubai.

Reviewed on: 10/01/2026 · Full bio →