Value Added Tax was introduced in the UAE on January 1, 2018, at a standard rate of 5%. For businesses operating in the Emirates, understanding VAT obligations is critical to maintaining compliance and avoiding penalties.
Who Needs to Register?
Businesses with taxable supplies exceeding AED 375,000 annually are required to register for VAT. Voluntary registration is available for businesses with supplies above AED 187,500. Registration is done through the Federal Tax Authority (FTA) portal.
Key Compliance Requirements
Maintaining proper records is the foundation of VAT compliance. Businesses must keep records of all supplies and purchases, tax invoices, credit notes, and import/export documentation for a minimum of five years.
Filing and Payment
VAT returns must be filed quarterly or monthly, depending on your turnover. The deadline is the 28th day following the end of each tax period. Late filing attracts penalties starting at AED 1,000 for the first offence.
Common Mistakes to Avoid
Many businesses struggle with incorrect tax treatment of transactions, failing to issue proper tax invoices, and not reclaiming eligible input tax. Working with a qualified accounting firm ensures these pitfalls are avoided.
Need help with VAT registration, return filing, or getting your invoicing right? Get in touch with our team - we handle end-to-end VAT compliance for businesses across the UAE and can review your current position.