UAE VAT
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Divide the VAT-inclusive amount by 1.05 to get the net amount, then subtract it from the gross to find the VAT. For example, AED 10,000 inclusive of VAT contains AED 476.19 of VAT (10,000 ÷ 1.05 = 9,523.81 net). A common mistake is taking 5% of the gross (AED 500), which overstates the VAT.

Registration is mandatory when taxable supplies and imports exceed AED 375,000 over the previous 12 months (or are expected to in the next 30 days). Voluntary registration is available from AED 187,500. Businesses must register within 30 days of crossing the mandatory threshold.

Only if their taxable turnover crosses the thresholds: mandatory at AED 375,000 per year, voluntary from AED 187,500. Below AED 187,500 a freelancer cannot register and does not charge VAT.

Both mean no VAT is charged to the customer, but the business treatment differs. Zero-rated supplies (exports outside the GCC, international transport, first supply of new residential buildings, certain education and healthcare) are taxable at 0%, so the business can reclaim its input VAT. Exempt supplies (residential rent, bare land, local passenger transport, certain financial services) sit outside VAT, so related input VAT cannot be reclaimed.

Certain fenced free zones are treated as designated zones, where qualifying goods transactions between designated zone companies can be outside the scope of UAE VAT. Services, however, are generally treated as supplied in the UAE and follow normal VAT rules, so treatment must be checked case by case.

Most businesses file quarterly, with the return and payment due within 28 days of the end of the tax period, through the FTA portal. Common penalties include AED 10,000 for late registration and escalating fines for late filing and late payment, plus penalties for non-compliant tax invoices.