VAT (Value Added Tax) in the UAE is a 5% consumption tax applied to most goods and services at each stage of the supply chain, introduced in 2018. Businesses that cross a set turnover threshold must register with the Federal Tax Authority, charge VAT on their sales, and can generally reclaim VAT paid on their own business purchases.
Who Has to Register
Registration becomes mandatory once a business's taxable turnover crosses the mandatory threshold set by the Federal Tax Authority; below that, voluntary registration is often still possible for businesses that want to reclaim VAT on their costs.
How the 5% Actually Works
A registered business adds 5% VAT on top of its sale price, collects it from the customer, and remits it to the FTA — while also reclaiming the VAT it paid on its own eligible business expenses. The net amount owed is the difference between VAT collected and VAT paid.
Zero-Rated and Exempt Supplies
Some goods and services are zero-rated (0% VAT but still reportable) or exempt (no VAT and generally not reclaimable), including specific categories like certain healthcare, education, and financial services — the exact treatment depends on the specific supply.
Check Your Own Numbers
Add, remove or check your VAT position with the UAE VAT Calculator, free and in under a minute, with no sign-up required.
Frequently Asked Questions
Is VAT the same across all seven emirates?
Yes — VAT is a federal tax administered by the Federal Tax Authority and applies at the same 5% rate across the entire UAE.
Can I reclaim VAT I've paid as a business?
Registered businesses can generally reclaim VAT paid on eligible business expenses, offsetting it against the VAT they've collected.
What happens if I don't register when I should?
Failing to register once you cross the mandatory threshold can result in FTA penalties, so it's worth checking your turnover regularly if you're growing toward it.
Do all invoices need to show VAT separately?
Yes — a compliant UAE tax invoice must show the VAT amount separately along with other mandatory fields like your Tax Registration Number (TRN).
Is VAT charged on exports outside the UAE?
Exports outside the GCC are generally zero-rated, meaning 0% VAT is charged but the supply is still reportable — specific conditions apply.