Key points
- The standard VAT rate in Dubai and the rest of the UAE is 5%
- Registration is mandatory above AED 375,000 of taxable turnover and optional from AED 187,500
- Returns are usually quarterly, due by the 28th day after the period
- Keep VAT records for at least five years
How VAT works
Value added tax is a tax on consumption, collected in stages. A registered business charges VAT on its sales (output tax), pays VAT on its purchases (input tax), and pays the difference to the Federal Tax Authority. The final consumer bears the cost.
VAT was introduced in the UAE on 1 January 2018 at a standard rate of 5%. It is a federal tax, so the rate and rules are the same in Dubai, Abu Dhabi and every other emirate.
Who must register
| Situation | Requirement |
|---|---|
| Taxable supplies and imports above AED 375,000 in the last 12 months, or expected in the next 30 days | Registration is mandatory |
| Taxable supplies or taxable expenses above AED 187,500 | Registration is optional |
| Below AED 187,500 | Registration is not available |
| Non-resident business making taxable supplies in the UAE | Must register, whatever the value |
You have 30 days to apply once you cross the mandatory threshold. The penalty for late registration is AED 10,000. Our VAT registration page lists the documents and steps.
Standard-rated, zero-rated and exempt
Most goods and services are standard-rated at 5%. Two other treatments matter.
Zero-rated supplies are taxable at 0%. You charge no VAT and can still recover input tax on your costs. Examples are exports of goods and services outside the GCC, international transport, the first supply of new residential property within three years of completion, certain education and healthcare services, and investment-grade precious metals.
Exempt supplies carry no VAT, and input tax on related costs cannot be recovered. Examples are residential rent, bare land, local passenger transport and certain financial services.
The distinction matters. A business that makes only exempt supplies cannot register and bears VAT as a cost.
Tax invoices
A registered business must issue a tax invoice for standard-rated supplies within 14 days. A full tax invoice shows the words "Tax Invoice", the supplier's name, address and TRN, the customer's details, a sequential invoice number, the date, a description of the supply, the amount before VAT, the VAT rate and the VAT in dirhams.
Input tax can be recovered only on the strength of a valid tax invoice addressed to your business. The UAE is also phasing in mandatory electronic invoicing between businesses, so expect invoice formats to tighten further.
Returns and payment
Returns are filed online through EmaraTax. Most businesses file quarterly; those with annual turnover of AED 150 million or more usually file monthly. The return and the payment are due by the 28th day after the end of the tax period.
If input tax exceeds output tax, you can claim a refund or carry the credit forward. From 1 January 2026, refunds must be claimed within five years.
Imports and services from abroad
VAT on imported goods is usually accounted for through the reverse charge in your return, using your customs registration, so there is no cash cost if you can recover it.
The reverse charge also applies when you buy services from suppliers outside the UAE, such as software subscriptions, overseas consultants and advertising platforms. It is one of the most commonly missed entries in VAT returns.
Penalties to know
| Failure | Penalty |
|---|---|
| Late registration | AED 10,000 |
| Late filing of a return | AED 1,000, or AED 2,000 for a repeat within 24 months |
| Late payment | A percentage of the unpaid tax that grows over time |
| Error in a return above AED 10,000 | Voluntary disclosure required; penalty depends on timing |
VAT penalties are set by cabinet decision and are revised from time to time. Confirm the current amounts before relying on them.
This guide is general information based on UAE rules as understood in October 2026. Tax rules change and depend on your facts. Speak to us before acting on it.