How VAT works in the UAE
VAT was introduced in the UAE on 1 January 2018 at a standard rate of 5%. Registered businesses charge VAT on their taxable supplies (output tax) and recover VAT paid on business purchases (input tax). The difference is paid to, or refunded by, the Federal Tax Authority (FTA).
Some supplies are zero-rated, such as most exports and international transport, which means VAT is charged at 0% but input tax can still be recovered. Others are exempt, such as certain financial services and residential rent, where no VAT is charged and related input tax generally can't be recovered.
When you must register
Registration depends on the value of your taxable supplies and imports.
| Situation | Requirement | Threshold |
|---|---|---|
| Taxable supplies in the last 12 months, or expected in the next 30 days | Mandatory registration | Above AED 375,000 |
| Taxable supplies or expenses | Voluntary registration | Above AED 187,500 |
| Below the voluntary threshold | Cannot register | Up to AED 187,500 |
Registration is done online through the FTA's EmaraTax portal. Once approved, you receive a Tax Registration Number (TRN) that must appear on your tax invoices.
Tax invoices and records
To recover input tax, you need a valid tax invoice from your supplier. A full tax invoice must show, among other details, the supplier's name, address and TRN, the date, a description of the goods or services, the amount excluding VAT, the VAT rate and the VAT amount.
Check your supplier invoices as they arrive. Claiming input tax on an invoice without a valid TRN is one of the most common errors found in FTA audits.
Filing VAT returns
Most businesses file quarterly, though the FTA can assign monthly periods. Returns and payment are due by the 28th day after the end of each tax period. For a quarter ending 31 March, the deadline is 28 April.
- Reconcile sales and purchases to your books before filing.
- Apply the reverse charge on imported services and goods where required.
- Keep a working file for each return, linking every box to your records.
Common mistakes to avoid
- Registering late after passing the AED 375,000 threshold.
- Treating exempt supplies as zero-rated, or the other way round.
- Missing reverse charge on services bought from overseas suppliers.
- Claiming input tax on blocked items such as most entertainment costs.
- Not correcting errors through a voluntary disclosure once they are found.
If you're unsure whether past returns are right, a VAT health check is the quickest way to find out before the FTA does.
This article is general information based on UAE rules as of November 2026 and is not tax advice. Rules change, so please WhatsApp us or call +971 50 512 4558 about your situation.