Value Added Tax at 5% has applied in the UAE since 2018. It is simple in principle, since you charge VAT on taxable sales and reclaim the VAT you pay on business costs, but the practical details trip up many small businesses. This guide covers the essentials.

Who must register

You must register with the Federal Tax Authority (FTA) if the total value of your taxable supplies and imports exceeded AED 375,000 in the previous 12 months, or you expect it to in the next 30 days. You may register voluntarily if your supplies or expenses exceed AED 187,500. Registration is done online through the FTA’s EmaraTax portal, and you receive a Tax Registration Number (TRN).

What you charge

  • Standard-rated (5%): most goods and services sold in the UAE.
  • Zero-rated (0%): certain supplies such as exports of goods and services outside the GCC, international transportation, and some education and healthcare services. You still report them and can usually reclaim related VAT.
  • Exempt: items such as residential rent, bare land and some financial services. You do not charge VAT and generally cannot reclaim related input VAT.
  • Out of scope: supplies that fall outside the UAE VAT law.

Getting the category right matters, because the wrong treatment on an invoice means the wrong amount in your return. Your software should let you assign a tax category to each line.

Invoices and credit notes

A registered business must issue a tax invoice for taxable supplies, normally within 14 days of the supply. A full tax invoice must show the words “Tax Invoice”, your name, address and TRN, the customer’s details, a unique sequential number, the date, a description, quantity, unit price, the VAT rate and the amount payable in AED. Read our full tax invoice checklist. When you need to correct an invoice, issue a credit note rather than editing the original.

Filing and paying

VAT returns are filed through EmaraTax, usually quarterly, with some businesses on monthly periods. The return and any payment are generally due within 28 days of the end of the tax period. Missing a deadline can lead to administrative penalties, so put the dates in your calendar and set a reminder a week earlier.

Records you must keep

Keep tax invoices, credit and debit notes, import and export documents, bank records and your accounts, generally for five years. Records should be available in English or Arabic on request. Cloud or self-hosted accounting software that stores documents with each transaction makes an audit far less stressful.

Common mistakes

  1. Charging VAT before registering, or failing to register after crossing the threshold.
  2. Issuing invoices without a TRN or sequential number.
  3. Reclaiming VAT on costs that are not business-related or lack a valid tax invoice from the supplier.
  4. Treating exports or exempt supplies incorrectly.
  5. Leaving reconciliation to the last week of the quarter.

How software helps

Good business software calculates VAT per line, numbers invoices without gaps, stores the TRN, produces credit notes and gives you a VAT summary by period so the return takes minutes, not days. Our systems for retail, services and trading include VAT-ready documents as standard.

This guide is general information, not legal or tax advice. Rules and thresholds change, so confirm current requirements with the relevant authority or a licensed adviser before you act.

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