Complete UAE VAT Guide 2024

1. UAE VAT Overview

Value Added Tax (VAT) was introduced in the UAE on January 1, 2018, at a standard rate of 5%. It is a consumption tax levied on most goods and services at each stage of the supply chain.

Key Points:

Standard VAT rate: 5%
Administered by the Federal Tax Authority (FTA)
Applies to most goods and services
Businesses can reclaim VAT on business expenses

2. VAT Registration Requirements

Mandatory Registration

Threshold	Requirement	Timeline
AED 375,000+	Mandatory registration	Within 30 days
AED 187,500 - 375,000	Voluntary registration	Any time
Below AED 187,500	Cannot register	N/A

Registration Process

Create an e-Services account on FTA portal
Complete VAT registration application
Submit required documents (Trade License, Emirates ID, etc.)
Receive Tax Registration Number (TRN)
Display TRN on all tax invoices

Important: Failure to register when required can result in penalties up to AED 20,000.

3. VAT Rates and Categories

Rate	Category	Examples
5%	Standard Rate	Most goods and services, restaurants, hotels, electronics
0%	Zero-Rated	Exports, international transport, certain healthcare and education
Exempt	VAT Exempt	Local transport, bare land, residential properties

4. Compliance and Filing

VAT Return Filing Schedule

Quarterly Returns: For businesses with annual turnover below AED 150 million
Monthly Returns: For businesses with annual turnover above AED 150 million
Deadline: Within 28 days after the end of the tax period

VAT Return Contents

Total sales and income subject to VAT
VAT on sales (output tax)
Total purchases subject to VAT
Recoverable VAT on purchases (input tax)
Net VAT payable or refundable

5. Penalties and Violations

Violation	Penalty
Failure to register for VAT	AED 20,000
Failure to submit VAT return	AED 1,000 first time, AED 2,000 repeat
Late payment of VAT	2% immediately, up to 4% after 7 days, 1% daily (max 300%)
Incorrect tax return	Fixed penalty of AED 3,000 - 10,000
Failure to maintain records	AED 10,000 first time, AED 50,000 repeat

6. Exemptions and Zero-Rated Supplies

Zero-Rated Supplies (0% VAT)

Exports of goods and services outside GCC
International transportation
Certain healthcare services
Certain education services
First supply of residential buildings
Crude oil and natural gas

Exempt Supplies (No VAT)

Local passenger transport
Bare land
Residential building supply (after first supply)
Financial services (specific)

7. Record Keeping Requirements

Mandatory Records (Keep for 5 years minimum):

All tax invoices issued and received
Tax credit notes and debit notes
Import/export documentation
Accounting records and financial statements
VAT returns and correspondence with FTA

Tax Invoice Requirements

Supplier's name, address, and TRN
Customer's name and address
Invoice date and unique invoice number
Description of goods/services
Unit price and quantity
VAT rate and amount
Total amount payable

8. Frequently Asked Questions

Q: When should I register for VAT?

A: You must register within 30 days if your taxable supplies exceed AED 375,000 in the last 12 months or are expected to exceed this threshold in the next 30 days.

Q: Can I claim VAT refunds?

A: Yes, if your input tax exceeds output tax, you can claim a refund. Tourists can also claim VAT refunds through the Tax-Free shopping scheme.

Q: What happens if I make a mistake in my VAT return?

A: You can submit a voluntary disclosure to correct errors. If done within the specified timeframe, penalties may be reduced or waived.

Q: Do I need to charge VAT on exports?

A: No, exports outside the GCC are zero-rated (0% VAT), but you must maintain proper documentation.

Q: How often do I need to file VAT returns?

A: Quarterly for most businesses (annual turnover below AED 150 million), monthly for larger businesses.

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