VAT Services

Value Added Tax (VAT) will provide the UAE with a new source of income which will be continued to be utilized to provide high-quality public services.

It will also help government move towards its vision of reducing dependence on oil and other hydrocarbons as a source of revenue.

VAT-registered businesses collect the amount on behalf of the government; consumers bear the VAT in the form of a 5 percent increase in the cost of taxable goods and services they purchase in the UAE.

UAE imposes VAT on tax-registered businesses at a rate of 5 percent on a taxable supply of goods or services at each step of the supply chain.

Tourists in the UAE also pay VAT at the point of sale. 

VAT registered businesses or the ‘taxable persons’ must submit a ‘VAT return’ to Federal Tax Authority (FTA).

A VAT return summarises the value of the supplies and purchases a taxable person has made during the tax period and shows the taxable person's VAT liability.

Liability of VAT

The liability of VAT is the difference between the output tax payable (VAT charged on supplies of goods and services) for a given tax period and the input tax (VAT incurred on purchases) recoverable for the same tax period.

Where the output tax exceeds the input tax amount, the difference must be paid to FTA. Where the input tax exceeds the output tax, a taxable person will have the excess input tax recovered; he will be entitled to set this off against subsequent payments due to FTA.

Taxable businesses must file VAT returns with FTA regularly and usually within 28 days of the end of the 'tax period' as defined for each type of business. A 'tax period is a specific time for which the payable tax shall be calculated and paid. The standard tax period is:

• quarterly for businesses with an annual turnover below AED150 million
• monthly for businesses with an annual turnover of AED150 million or more.