Understanding UAE Value Added Tax (VAT) Legislation
Enacted under Federal Decree-Law No. 8 of 2017, Value Added Tax (VAT) is levied at a standard rate of 5% on taxable supplies of goods and services. The tax is administered by the Federal Tax Authority (FTA).
Failing to register within 20 business days of reaching the mandatory AED 375,000 threshold incurs an automatic AED 10,000 late registration penalty. For corporate tax considerations, see our 9% Corporate Tax & Freezone Guide.
Evaluate Annual Taxable Revenue
Mandatory 5% VAT Registration Required
Your taxable turnover of AED 450,000 exceeds the mandatory FTA threshold of AED 375,000. Failure to register results in a late registration penalty of AED 10,000.
VAT Threshold Summary
| Mandatory Threshold: | AED 375,000 / year |
| Voluntary Threshold: | AED 187,500 / year |
| Standard VAT Rate: | 5% Tax Rate |
| Export Services Rate: | 0% (Zero-Rated) |
Interlinked UAE Compliance Portals
Frequently Asked Questions (UAE VAT Rules)
Under Federal Decree-Law No. 8 of 2017, business entities residing in the UAE must register for 5% VAT if their taxable supplies and imports exceed AED 375,000 in the preceding 12 months or are expected to exceed AED 375,000 in the next 30 days.
Businesses can voluntarily register for VAT if their annual taxable supplies or taxable expenses exceed AED 187,500, allowing them to recover input VAT incurred on business costs under our Corporate Tax Guide.
Zero-rated 0% VAT applies to exports of goods and services outside the GCC, international transport of passengers/goods, healthcare, basic education, and the first supply of residential property within 3 years of completion.
Exempt supplies include bare land, margin-based financial services, local passenger transport, and residential building leases under our Ejari Tenancy Guide.
FTA VerifiedOfficial VAT Source
• Federal Tax Authority (FTA VAT Registration Portal): tax.gov.ae