Free enquiry
+971522829190

VAT Advisory

  1. Home
  2. Enablement Services
  3. VAT Advisory

Navigate VAT & Tax with Confidence

Ensure compliance, minimise fines and unlock savings with our comprehensive VAT & tax advisory services.
Get Started Now

Introduction

What Is Value Added Tax (VAT)?

 

Value Added Tax (VAT) is an indirect tax applied to the consumption of goods and services at each step of the supply chain. Businesses collect VAT on sales (output VAT) and pay VAT on purchases (input VAT); they remit the difference to the government. The UAE introduced VAT on 1 January 2018, imposing a standard rate of 5 % on most goods and services. Certain goods (exports, international transport, medical supplies and basic food items) are zero-rated, meaning VAT is charged at 0 %, while others (financial services, local passenger transport, residential property leases) are exempt. Understanding these categories is essential because zero-rated supplies allow businesses to claim input VAT credits, whereas exempt supplies do not.

 

History of VAT

 

Historically, the UAE was considered a tax-free haven. To diversify revenue and align with global taxation standards, the government introduced VAT across all seven emirates on 1 January 2018. The new tax aims to support public services and infrastructure while keeping the rate low to preserve the country’s competitiveness. VAT is part of a broader suite of taxes (excise and corporate tax) designed to promote fiscal sustainability and transparency.



Our VAT & Tax Advisory Services

Our consultancy offers comprehensive VAT and tax support tailored to your business’s needs:

VAT registration & deregistration

  • We handle mandatory and voluntary registration, secure your TRN, and manage deregistration when needed. 
  •  

VAT implementation & training

  • We review operations and accounting systems to ensure VAT compliance; train staff on invoice preparation and record-keeping.
  •  

VAT return filing & compliance

  • We calculate net VAT payable/refundable, reconcile input and output taxes, prepare quarterly returns and submit them on time.
  •  

VAT refund & voluntary disclosure

  • We assist with refund applications when input VAT exceeds output VAT and manage voluntary disclosures for errors.
  •  

VAT audit & health check

  • We conduct compliance audits to identify gaps and rectify issues before FTA audits, and provide ongoing monitoring.
  •  

VAT group registration

  •  For connected businesses, we advise on the advantages and requirements of forming a VAT group.
  •  

VAT assessment & appeals

  • We prepare responses to FTA assessments, file reconsideration requests and represent clients in disputes.
  •  

VAT Compliance in the UAE

Compliance begins with registration. Businesses must register for VAT when their taxable supplies and imports exceed AED 375,000 in a 12-month period. Registration is voluntary when supplies or expenses exceed AED 187,500. Companies engaged exclusively in exempt supplies do not need to register. The Federal Tax Authority (FTA) requires:
Accurate accounting records: Businesses must maintain invoices, ledgers and VAT returns for at least five years (15 years for real-estate records).
Issuing tax invoices: Invoices must contain specific details, including TRN, VAT amount and customer information.
Quarterly or monthly VAT returns: Returns are usually filed within 28 days after the end of the tax period
Updating registration details: Changes in legal structure, business activities or partners must be reported within 20 business days.
Failure to register on time may result in a AED 10,000 fine, while failing to submit or correct VAT returns attracts fines ranging from AED 1,000 to AED 50,000. Not updating tax records can lead to AED 5,000 for the first offence and AED 10,000 for subsequent offences.

What Will Be the Impact of VAT on Your Business?

VAT affects pricing, cash flow and administrative processes. Businesses must adjust pricing to include VAT, implement systems to track input and output tax, and potentially offer training to staff. While VAT can initially increase costs, it allows businesses to reclaim input VAT, reducing net tax liability. Proper planning ensures smooth cash-flow management, prevents under/over-collection and avoids penalties. The tax also fosters accountability and transparency by requiring systematic record-keeping.

 

Should All Businesses Register for VAT in the UAE?

Not all businesses are required to register. Mandatory registration applies to resident businesses whose taxable turnover exceeded AED 375,000 in the past 12 months or is expected to exceed that in the next 30 days. Voluntary registration is available when taxable supplies or expenses exceed AED 187,500. Businesses engaged solely in exempt supplies—such as local passenger transport, certain financial services and residential property leases—do not need to register. Businesses with mixed supplies must register and segregate zero-rated, standard-rated and exempt transactions.

Why Companies Need a VAT Consultant

VAT regulations are complex, and misinterpretation can lead to over-payment or penalties. A qualified VAT consultant helps businesses:
Optimise VAT recovery
  • Ensuring all input tax credits are claimed to minimise net tax liabilities.
  •  
Navigate audits and disputes
  •  Experienced consultants assist with FTA audits, prepare responses and manage disputes.
  •  
Avoid fines
  • Professionals ensure timely registration, accurate return submission and proper record maintenance.
  •  
Focus on core business
  • Outsourcing VAT functions frees internal resources so management can concentrate on growth.
  •  

VAT Rates in UAE

The applicable VAT rates in the UAE are as follows:

Standard rated (5% VAT)

Zero-rated (0% VAT)

Exempted (No VAT)

Zero-Rated vs. VAT-Exempt Supplies

It’s important to distinguish between goods and services that are zero-rated and those that are entirely exempt from VAT. In both cases the tax charged on the sale is 0 %, but the treatment of input tax differs. A zero-rated item is still considered a taxable supply: you apply VAT at 0 % on the sale and can still claim back the VAT paid on related expenses. With exempt supplies, the sale is outside the scope of VAT and the business cannot recover VAT paid on the inputs. In other words, zero-rated status allows you to offset input VAT, whereas exempt status does not.

As the table shows, the UAE’s 9% rate is significantly lower than most advanced economies and even lower than regional competitors like Singapore and Hong Kong. Combined with the 0% threshold and free-zone incentives, Dubai remains an attractive hub for multinational corporations, startups and freelancers.

VAT Guidelines, Registration, Filings & Fines

Registration Process

VAT registration involves creating an account on the FTA portal and submitting the required documentation. Create an FTA account, provide documents such as Emirates ID, passport, trade licence and financial statements, and submit the application. Once approved, the business receives a Tax Registration Number (TRN) and VAT certificate.

Filing Returns & Record-Keeping

Returns must be submitted on a quarterly basis (or monthly for high-turnover companies) within 28 days after the tax period. Businesses must maintain records, including tax invoices, accounting books and balance sheets, for five years (15 years for real estate records). Branches operate under a single VAT registration; separate numbers are not required.

Amendments & Deregistration

Businesses may amend their registration within 20 working days when there is a change in business activities, ownership, contact details or other statutory information. Deregistration is required when taxable supplies fall below AED 187,500 or the business stops making taxable supplies. Applications must be filed within 20 business days to avoid penalties.

Penalties & Fines

Non-compliance leads to financial penalties:

  • Failure to register: AED 10,000 fine.
  • Late or incorrect VAT returns: Fines between AED 1,000 and AED 50,000 depending on severity.
  • Failure to update registration details: AED 5,000 for the first offence and AED 10,000 for subsequent offences.
  • Late payment of VAT: Interest and additional fines may accrue daily after the due date (as per FTA guidelines).
VAT Assessment and Appeals

If the FTA issues an assessment or penalty that you believe is incorrect, you can request a reconsideration. According to the UAE government portal, taxpayers must file a reconsideration request in Arabic within 45 days of the FTA’s decisionu.ae. The FTA reviews the request within 45 business days and informs the applicant within five business daysu.ae. If unresolved, the applicant may lodge an objection with the Tax Disputes Resolution Committee at the Ministry of Justice, which issues its verdict within 20 business daysu.ae (extendable by another 20 days). Before approaching the committee, the applicant must settle all taxes and penaltiesu.ae. Both parties may then appeal the committee’s decision in court.

Our specialists assist clients through every stage of this process—from preparing reconsideration requests and organising documentation to representing you before the committee and courts.

5 Things to Know About VAT in Dubai

Registration thresholds: AED 375,000 for mandatory registration and AED 187,500 for voluntary registration.
Trade Name Reservation & Licensing Approvals
Classification of supplies: Understanding the difference between taxable, zero-rated, exempt and out-of-scope supplies ensures accurate invoicing and reporting.
Quarterly return filing: VAT returns are generally filed quarterly within 28 days, and businesses must retain records for 5–15 years.
Penalties are significant: Fines for non-compliance range from AED 1,000 to AED 50,000 and increase for repeated offences. Partnering with an experienced consultant can help you avoid these penalties.

Why Choose Us?

At Dubai Setup Advisors (DSA), we go beyond basic company registration. We provide strategic guidance, legal clarity, and operational support tailored for global entrepreneurs and investors entering the UAE market. Here’s why clients from over 30 countries trust us to build their presence in the Emirates:

Extensive Experience

End-to-End Service

Transparent Pricing

Global Perspective

Personalized Approach

Comprehensive Network

FAQs

VAT was introduced across all seven emirates on 1 January 2018 at a standard rate of 5 %.

Zero-rated supplies are taxable at 0 % and allow businesses to claim input VAT credits; exempt supplies are outside the VAT system, and no input tax credit can be claimed.

  1. Registration is mandatory when taxable turnover exceeds AED 375,000 and voluntary when supplies or expenses exceed AED 187,500.
  1. VAT returns are generally filed quarterly, and must be submitted within 28 days after the end of the tax period.
  1. Fines range from AED 10,000 for failing to register to AED 50,000 for incorrect returns. Not updating tax records results in AED 5,000 to 10,000 fines.
  1. Yes. Non-resident businesses making taxable supplies in the UAE must register and account for VAT.
  1. Businesses must apply for amendments within 20 business days of any change in details such as legal structure or contact information.
  1. Two or more UAE entities with common ownership can form a VAT group, receive a single TRN and file one return.
  1. Records must be retained for five years in general and 15 years for real estate.
  1. You can request a reconsideration within 45 days of the FTA decision; if unresolved, appeal to the Tax Disputes Resolution Committee, which will issue a verdict within 20 business days.

Let's Build a Brand That Sells

Partner with DSA to craft a digital presence that converts. Whether you need a captivating brand, a high-performance website or a data-driven marketing strategy, we’re ready to help you grow in the UAE and beyond.

Book a Strategy Call