VAT Support & Compliance

Value Added Tax (VAT) is an indirect tax applied to most goods and services supplied in the UAE. The standard VAT rate is 5%, although certain supplies may be zero-rated, exempt, or subject to special rules.

No. VAT registration depends on your taxable supplies, imports, and applicable registration conditions.

For UAE resident businesses:

• Mandatory registration: Generally required when taxable supplies and imports exceed AED 375,000 over the previous 12 months or are expected to exceed this threshold in the next 30 days.
• Voluntary registration: May be available when taxable supplies, imports, or eligible taxable expenses meet the AED 187,500 threshold, subject to applicable conditions.

Mandatory registration may not apply if you remain below the threshold and do not expect to exceed it within the relevant period. However, you may qualify for voluntary registration if you meet the relevant conditions. Your specific circumstances should be reviewed before deciding.

Not necessarily. A new business must assess its expected taxable supplies and the applicable registration rules. Registration may become necessary before the business has accumulated 12 months of actual sales if the relevant forward-looking threshold is expected to be exceeded.

VAT registration is the process of registering your business with the Federal Tax Authority (FTA). A Tax Registration Number (TRN) is the identification number issued following successful registration. A business should not charge VAT as a VAT-registered supplier before it is legally entitled to do so.

VAT returns are generally filed quarterly, although the FTA may assign a different tax period. Returns and related payments are generally due within 28 days after the end of the relevant tax period, subject to the applicable rules and deadlines.

Common documents include:

• Sales invoices and credit notes.
• Purchase invoices and expense receipts.
• Bank statements and payment records.
• Import and export documentation, where applicable.
• Previous VAT returns and relevant tax records.
• Supporting documents for adjustments and special transactions.

The exact documents depend on your business activities and transactions.

Input VAT may generally be recoverable on eligible business expenses used to make taxable supplies, provided the relevant legal conditions and documentation requirements are met. VAT on certain expenses is restricted or non-recoverable, so not every business purchase qualifies.

Zero-rated supplies are taxable at 0%, and eligible related input VAT may generally be recoverable. Exempt supplies are not subject to VAT, and input VAT recovery relating to exempt activities is generally restricted, subject to applicable rules.

Free zone businesses are not automatically exempt from VAT. VAT treatment depends on the nature of the transactions, the goods or services involved, and the applicable conditions. Designated-zone rules for certain goods do not create a blanket VAT exemption.

Late filing or payment can result in administrative penalties and other compliance consequences. Businesses should monitor their assigned tax periods and settle obligations promptly. If you have missed a deadline, your records and circumstances should be reviewed to determine the appropriate corrective steps.

The appropriate correction method depends on the nature and value of the error and the applicable FTA rules. A Voluntary Disclosure may be required in certain circumstances. Businesses should review errors promptly rather than assuming they can simply adjust any amount in a future return.

A VAT-registered business generally must file its VAT return even if it had no sales or business activity during the tax period. A nil return may be appropriate, depending on the actual transactions and circumstances.

VAT deregistration may be possible when the applicable legal conditions are met, including relevant turnover and eligibility requirements. However, falling below the mandatory registration threshold does not always mean immediate deregistration is permitted or required. The FTA process and any outstanding obligations must be considered.

VAT records generally need to be retained for at least five years, with longer periods applying in certain circumstances, including some real estate-related records. Businesses should confirm the applicable retention requirements for their activities.

Fees depend on transaction volume, the number of VAT returns required, the complexity of your transactions, the quality of your existing records, and whether registration, historical corrections, or additional compliance support is needed. We can tailor a service package to your business.