What is UAE VAT?
UAE VAT is a 5% federal tax on most goods and services, introduced 1 January 2018. Mandatory registration at AED 375,000 annual turnover; voluntary at AED 187,500. Standard rate 5%; some supplies are zero-rated (exports, healthcare, education) or exempt (residential rent, financial services, local passenger transport).
Current Rate (Quarterly returns (some businesses monthly), due 28 days after period end)
5% standard, 0% zero-rated, exempt for certain supplies
Example
A consultancy invoicing AED 100,000 net charges AED 105,000 (5% VAT). If it spent AED 21,000 on VAT-bearing inputs (AED 1,000 input VAT), it remits AED 4,000 to the FTA.
Related terms
The Tax Registration Number is the 15-digit identifier issued by the FTA to every VAT-registered business and Corporate Tax-registered entity. It must appear on tax invoices and FTA correspondence.
UAE Corporate Tax is the federal tax on business profits introduced by Federal Decree-Law No. 47 of 2022, effective 1 June 2023. It applies a 0% rate on the first AED 375,000 of taxable income and 9% above. Qualifying Free Zone Persons can pay 0% on Qualifying Income. Multinational groups within Pillar Two scope face a 15% Domestic Minimum Top-up Tax from 1 January 2025.
UAE Free Zones are special economic zones offering 100% foreign ownership, customs benefits, and (subject to QFZP rules) preferential 0% Corporate Tax on Qualifying Income. There are 40+ Free Zones across the seven emirates, each with their own Authority and licensing rules.
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