UAE VAT was introduced in 2018 at 5%. Eight years in, many entrepreneurs forming UAE companies still have questions about when they need to register, what is taxable, and what happens if they miss the threshold.
UAE VAT was introduced in 2018 at 5%. Eight years in, many entrepreneurs forming UAE companies still have questions about when they need to register, what is taxable, and what happens if they miss the threshold.
You must register for VAT if your taxable supplies (sales of VAT-able goods and services) exceed AED 375,000 in a 12-month period. Voluntary registration is available above AED 187,500.
Most goods and services are subject to the standard 5% rate. Zero-rated items include exports of goods outside the UAE, certain financial services, and international transportation. Exempt items include bare land transactions and certain residential property.
Free zone companies supplying to UAE mainland customers generally charge VAT. Free zone-to-free zone transactions can be zero-rated in certain circumstances. Companies exporting services outside the UAE can zero-rate those services. The rules depend on the nature of the supply and the location of the recipient.
Late registration triggers a penalty. Failure to register after reaching the threshold while continuing to invoice without VAT creates a liability for VAT that was legally due but not charged and may need to be paid out of the business's own funds.
DBC handles VAT registration for USD 270. If you have already missed the threshold, a voluntary disclosure handles the back-period. WhatsApp +971 52 277 4830.
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