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VAT Services

VAT (Value Added Tax) in the UAE is a consumption tax levied on goods and services at each stage of the supply chain. Implemented on January 1, 2018, the standard VAT rate is 5%. Here are eight major points about VAT in the UAE:

  • VAT Registration: Assistance with VAT registration and compliance in the UAE.
  • VAT Filing: Accurate preparation and filing of VAT returns.
  • VAT Advisory: Expert advice on VAT-related matters, including transaction analysis and compliance.
  • VAT Audit Support: Support during VAT audits and inquiries from the tax authorities.
  • Major Points of VAT

    Standard Rate

    The standard VAT rate in the UAE is 5%.

    Exemptions and Zero-Rated Supplies

    Certain goods and services are exempt from VAT or zero-rated. Zero-rated supplies include education, healthcare, and certain financial services. Exemptions apply to residential properties, bare land, and local passenger transport.

    Registration Threshold

    Businesses with a taxable supply exceeding AED 375,000 in a 12-month period must register for VAT. Voluntary registration is available for businesses with supplies or expenses exceeding AED 187,500.

    Filing and Payment

    VAT returns are typically filed quarterly. Businesses must file their VAT returns and make payments to the Federal Tax Authority (FTA) within 28 days after the end of the tax period.

    Input Tax Deduction

    Businesses can reclaim the VAT they pay on business-related goods and services (input tax) against the VAT they collect on sales (output tax).

    Compliance

    Businesses must maintain proper records and documentation for a minimum of five years. Non-compliance can result in penalties.

    Designated Zones

    Certain free zones in the UAE are considered designated zones. Supplies within these zones can be treated as outside the scope of UAE VAT, subject to specific conditions.

    Reverse Charge Mechanism

    For certain transactions, especially involving imports, the reverse charge mechanism applies. The recipient of the goods or services accounts for the VAT instead of the supplier.

    FAQs about VAT in the UAE

    Businesses with taxable supplies exceeding AED 375,000 in a 12-month period must register. Voluntary registration is available for those exceeding AED 187,500.

    The standard VAT rate is 5%.

    Exemptions include residential properties, bare land, and local passenger transport.

    Zero-rated supplies include specific categories such as education, healthcare, and certain financial services.

    VAT returns are generally filed quarterly, with the deadline being 28 days after the end of the tax period.

    The reverse charge mechanism applies primarily to imports, where the recipient accounts for the VAT instead of the supplier.

    Yes, businesses can reclaim input tax (VAT paid on business-related goods and services) against their output tax (VAT collected on sales).

    Designated zones are specific free zones where supplies can be treated as outside the scope of UAE VAT, provided certain conditions are met.
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