UAE VAT is 5% but compliance is more complex than the rate suggests — particularly for businesses with cross-border supplies, exempt sectors, or difficult input tax recovery positions. We advise on registration, structuring, partial exemption, and FTA dispute resolution.
In brief: UAE VAT runs at 5% with mandatory registration above AED 375,000 of taxable supplies. The recurring pain points are input tax recovery, zero-rating evidence for exports, property transactions, and FTA audits. We handle registration, returns, health checks, voluntary disclosures, audit defence, and VAT structuring for transactions, at fixed fees agreed upfront.
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Since VAT was introduced in the UAE in 2018, businesses have faced increasing FTA scrutiny. Input tax recovery positions, cross-border supply classification, and partial exemption calculations are areas where errors are common and costly.
Registration & Compliance
VAT Registration & Return Filing
We manage VAT registration with the FTA, prepare quarterly or monthly VAT returns, and advise on correct output tax accounting across all revenue streams.
Mandatory and voluntary VAT registration
VAT group registration structuring
Quarterly and monthly return preparation
Output tax reconciliation and review
VAT de-registration procedures
Input Tax Recovery
Input Tax Recovery & Partial Exemption
Businesses with both taxable and exempt supplies face a partial exemption calculation that directly affects how much input VAT they can recover. We assess your recovery position and identify legitimate opportunities to maximise input tax claims.
Input tax recovery rate calculation
Partial exemption method design
Blocked input tax identification
Capital goods adjustment scheme
Historic input tax recovery claims
Cross-Border
Cross-Border Supply Chain VAT
Cross-border transactions — imports, exports, services to international clients — have specific UAE VAT treatment that is often misapplied. We advise on the correct VAT position for complex supply chains and international arrangements.
Import and export VAT treatment
Zero-rating conditions for exports
Services supplied to non-UAE recipients
Designated zone VAT implications
Reverse charge mechanism
FTA Disputes
FTA Audit Support & Dispute Resolution
FTA VAT audits are becoming more frequent as the authority matures. We support businesses through the audit process — preparing responses, gathering supporting documentation, and representing clients in reconsideration applications and penalty appeals.
FTA audit preparation and response management
VAT health check before FTA audit
Voluntary disclosure preparation
Penalty reconsideration applications
Tax Disputes Resolution Directorate support
FAQ
VAT in the UAE Frequently Asked Questions
When must a business register for VAT in the UAE?+
Registration is mandatory when taxable supplies and imports exceed AED 375,000 over the previous 12 months or are expected to exceed it in the next 30 days. Voluntary registration is available from AED 187,500, which is often worthwhile for startups incurring significant input VAT before revenue scales. Non-resident businesses making taxable supplies in the UAE must register regardless of threshold.
What VAT rate applies and what is zero-rated?+
The standard rate is 5%. Zero-rated categories include exports outside the GCC implementing states, international transport, the first supply of new residential property within three years of completion, certain education and healthcare services, and qualifying investment precious metals. Exempt categories include most financial services, subsequent residential supplies, and local passenger transport. The distinction matters because zero-rating preserves input tax recovery while exemption blocks it.
What triggers an FTA VAT audit and how should we prepare?+
Common triggers include sustained refund positions, ratio anomalies between output and input tax, late or amended filings, sector campaigns, and third-party information mismatches. Preparation is documentary: valid tax invoices for input claims, export evidence for zero-rating, reconciliations between VAT returns, accounting records and audited financials, and clear working papers for adjustments. A pre-audit health check finds the gaps before the FTA does, usually at a fraction of the penalty exposure.
How does VAT apply to selling a business in the UAE?+
A share sale is generally outside the scope of VAT. An asset sale is a taxable supply unless it qualifies as a transfer of a going concern (TOGC), which requires the transfer of a whole business capable of separate operation to a VAT-registered buyer who continues the same business. Getting TOGC treatment wrong creates a 5% cash flow cost on the entire asset value plus penalty exposure, so the analysis belongs in deal structuring, not after signing.
What are the penalties for VAT non-compliance?+
Key exposures include fixed penalties for late registration and late filing, percentage-based penalties on late payment that escalate over time, and penalties for incorrect returns. A voluntary disclosure submitted before an FTA audit substantially reduces the penalty compared with waiting for the error to be found. Where penalties have already been imposed, reconsideration requests within 40 business days can reduce or cancel them on valid technical grounds.