VAT & Tax Consultancy
VAT registration, returns and record-keeping for UAE companies — done on time, with the thresholds and penalties explained before they cost you.
VAT has applied in the UAE since 1 January 2018 at a standard rate of 5%. The rate is simple; the obligations around it are where companies get caught — registering late, missing a filing deadline, reclaiming input tax they were not entitled to, or keeping records that do not stand up when the Federal Tax Authority asks.
Who has to register
Registration turns on your taxable turnover over a rolling period, not on your profit:
- Mandatory registration — once taxable supplies and imports exceed AED 375,000 in the previous 12 months, or where you expect to exceed it in the next 30 days.
- Voluntary registration — available once taxable supplies and imports, or taxable expenses, exceed AED 187,500.
Voluntary registration is worth considering if your customers are VAT-registered businesses and you incur recoverable input tax, because you can reclaim it. It is usually not worth it if you sell to consumers, since you then have to add 5% to your prices and take on the filing obligation for no offsetting benefit.
Non-resident businesses making taxable supplies in the UAE can face a registration obligation with no threshold at all. If you supply into the UAE from abroad, check this rather than assume the AED 375,000 figure protects you.
What your VAT rate actually is
Not everything is 5%. Supplies fall into categories, and the category changes both what you charge and what you can reclaim:
- Standard-rated (5%) — most goods and services.
- Zero-rated (0%) — including exports outside the GCC implementing states, certain international transport, and specific education and healthcare supplies. You charge nothing but still reclaim your input tax, so this is a favourable position.
- Exempt — including certain financial services, residential property after the first supply, bare land and local passenger transport. You charge nothing and cannot reclaim related input tax, which is materially different from zero-rated.
- Out of scope — supplies made outside the UAE.
Mixing these up is the most common and most expensive error we see. A business that treats an exempt supply as zero-rated reclaims input tax it was never entitled to, and that is recoverable from it later with penalties.
Returns, deadlines and payment
Returns are filed through the Federal Tax Authority's EmaraTax portal. Most businesses file quarterly; larger ones are assigned monthly periods. The return is due, and the tax payable, by the 28th day following the end of the tax period. If the 28th falls on a weekend or public holiday the deadline moves to the next working day.
Two points that cost businesses money:
- Filing on time but paying late still incurs penalties. The return and the payment are separate obligations.
- A nil return is still a return. If you had no activity in the period you must still file, and failing to do so is penalised exactly as a missed return.
Records you must keep
Tax records must generally be retained for five years, and longer for real estate. That means invoices issued and received, credit notes, import and export documentation, and records supporting the VAT treatment you applied. Tax invoices have mandatory content requirements — your TRN, the date, a sequential number, a description, the VAT amount in dirhams — and an invoice missing them may not support an input tax claim.
If your bookkeeping is informal, fix that before your first return rather than after your first query from the FTA. Reconstructing a year of records under a deadline is far more expensive than keeping them properly.
Penalties
The UAE penalty regime is administrative and applies automatically — there is no discretion at the point it is charged. Penalties attach to late registration, late filing, late payment (which accrues over time), incorrect returns, and failure to keep records. Voluntary disclosure of an error you find yourself is treated considerably better than the same error found during an FTA review, so if you discover a mistake, raise it rather than hope.
VAT and corporate tax are not the same thing
UAE corporate tax applies at 9% on taxable profit above AED 375,000 and is a separate regime with separate registration, separate returns and separate deadlines. Being registered for VAT does not register you for corporate tax, and the two have different definitions of nearly everything. Businesses regularly assume one covers the other; it does not.
What we do
We assess whether you must register, should register voluntarily, or should not register yet, and explain which way the numbers point. We handle registration and TRN issuance, set up the record-keeping so returns are a routine rather than a scramble, classify your supplies correctly at the start, prepare and file returns to deadline, and deal with FTA correspondence. Where a business has already fallen behind, we work out the exposure and the cleanest route back into compliance before anything is filed.
Frequently Asked Questions
- What is the VAT registration threshold in the UAE?
- Registration is mandatory once your taxable supplies and imports exceed AED 375,000 over the previous 12 months, or when you expect to exceed it within the next 30 days. Voluntary registration becomes available at AED 187,500 of taxable supplies, imports or expenses. Non-resident businesses supplying into the UAE can be required to register with no threshold at all.
- When are UAE VAT returns due?
- By the 28th day following the end of your tax period, with the payment due by the same date. Most businesses file quarterly and larger ones monthly. If the 28th falls on a weekend or public holiday the deadline moves to the next working day. Filing on time but paying late still attracts a penalty — they are two separate obligations.
- Do I need to file a VAT return if I had no sales?
- Yes. A nil return is still a return, and failing to submit one is penalised in the same way as missing a return with activity in it. As long as your registration is live, the filing obligation continues every period.
- What is the difference between zero-rated and exempt?
- On a zero-rated supply you charge 0% but can still reclaim the input tax you incurred on related costs. On an exempt supply you charge nothing and cannot reclaim that input tax. The difference is money, and treating an exempt supply as zero-rated means reclaiming tax you were never entitled to — which is recoverable from you later, with penalties.
- How long must I keep VAT records in the UAE?
- Generally five years, and longer for real estate. That covers invoices issued and received, credit notes, import and export documentation, and whatever supports the VAT treatment you applied. Tax invoices also have mandatory content requirements, and an invoice missing them may not support an input tax claim.
- Does being VAT registered mean I am registered for corporate tax?
- No. UAE corporate tax applies at 9% on taxable profit above AED 375,000 and is an entirely separate regime, with its own registration, returns and deadlines. The two use different definitions for nearly everything, and being registered for one gives you no standing in the other.