UAE VAT basics

The UAE introduced VAT on January 1, 2018 as part of GCC-wide harmonisation.

Standard rate: 5% (one of the lowest VAT rates globally) Zero-rated: Healthcare, education, international transport, exports, new buildings Exempt: Financial services (most), bare land, residential properties

Registration thresholds

  • Mandatory: Annual taxable supplies > AED 375,000
  • Voluntary: Annual taxable supplies > AED 187,500 (useful if you have significant input VAT to recover)

Free zones and VAT

Not all UAE free zones are VAT "designated zones." Designated zones are treated as outside the UAE for VAT purposes — goods can move between designated zones without VAT. However, services between businesses in designated zones are still subject to normal VAT rules.

Filing with the FTA

VAT returns are filed quarterly (or monthly for large taxpayers) through the Federal Tax Authority (FTA) eDirham portal. Due date: 28th of the month following the quarter end.