Introduction
Value Added Tax (VAT) is one of the key pillars of the UAE’s modern tax system, introduced in January 2018. Managed by the Federal Tax Authority (FTA), VAT applies to most goods and services supplied within the UAE, ensuring that the country continues to generate revenue to support infrastructure, education, and healthcare.
What is VAT in the UAE?
VAT (Value Added Tax) is a consumption-based tax charged at each stage of the supply chain. It is ultimately borne by the end consumer, while businesses act as intermediaries responsible for collecting and remitting VAT to the government.
- Standard VAT rate: 5%
- Zero-rated supplies: 0% (e.g., exports, international transport, certain education and healthcare services)
- Exempt supplies: No VAT charged (e.g., residential property rentals, certain financial services)
Who Needs to Register for VAT in the UAE?
Businesses must register for VAT based on their last twelve months taxable turnover:
- Mandatory registration: Turnover exceeds AED 375,000
- Voluntary registration: Turnover exceeds AED 187,500
If your company meets these thresholds, you must register through the FTA’s online portal. Finexus Advisory assists businesses through every step of the VAT registration and compliance process.
VAT Compliance Requirements
After registration, businesses are required to:
- Charge VAT on taxable goods and services.
- Issue tax invoices that meet FTA standards.
- Maintain accurate records for at least five years.
- Submit VAT returns (usually every quarter).
- Pay VAT liabilities to the FTA on time.
Non-compliance can result in hefty fines and administrative penalties.
VAT Returns and Filing in the UAE
VAT returns summarize your business’s taxable supplies, purchases, and total VAT due for a given period. Filing is usually quarterly, though some entities may be assigned monthly filing based on their turnover.
VAT Return Process:
- Log in to the FTA portahttps://eservices.tax.gov.ae/l.
- Prepare your VAT return form (VAT201).
- Review all taxable supplies and input tax credits.
- Submit and pay any outstanding VAT before the due date.
Finexus Advisory ensures accurate and timely VAT filings so that your business remains fully compliant with UAE tax regulations.
Input Tax and Output Tax Explained
- Output tax: VAT charged on your sales.
- Input tax: VAT paid on your purchases.
You can claim input tax credits on eligible expenses, reducing your VAT liability. However, certain expenses like entertainment or personal use may not qualify.
Penalties for VAT Non-Compliance
Failure to comply with VAT rules can lead to substantial fines, including:
- Late registration: AED 10,000
- Late filing: AED 1,000 (first time), AED 2,000 (repeat within 24 months)
- Incorrect tax return: AED 3,000–5,000
- Failure to maintain records: AED 10,000–50,000
Finexus Advisory helps businesses avoid penalties by ensuring that every VAT obligation is met on time.
How Finexus Advisory Can Help
At Finexus Advisory, our expert tax consultants provide comprehensive VAT registration, filing, and advisory services across the UAE. Whether you’re a start-up or an established company, we ensure that your VAT processes are accurate, compliant, and stress-free.
✅ VAT registration
✅ VAT De-registration
✅ VAT return filing
✅ VAT Health Check
✅ VAT Refund
✅ VAT Exception
If you are looking for professional Value Added Tax (VAT) services, contact us.
