UAE VAT is charged at 5% on most goods and services, and a business must register once its taxable supplies and imports pass AED 375,000 over the previous 12 months (or are expected to within the next 30 days). Below that, you may register voluntarily from AED 187,500 of supplies or taxable expenses. Registration is done online on the Federal Tax Authority's EmaraTax portal, returns are normally quarterly and due by the 28th day after the period ends, and a free zone licence does not take you out of VAT.
Below is the detail European founders tend to get wrong in year one. Figures were checked against Ministry of Finance and FTA texts on 15 October 2026.
UAE VAT at a glance
| Item | Rule |
|---|---|
| Standard rate | 5% (Decree-Law Article 3) |
| Mandatory registration | Taxable supplies and imports above AED 375,000 in the last 12 months, or expected in the next 30 days |
| Voluntary registration | Supplies or taxable expenses above AED 187,500 |
| Time to apply once liable | 30 days |
| Standard tax period | Three calendar months (the FTA can assign another length) |
| Return and payment due | By the 28th day after the tax period ends |
The UAE VAT rate: 5%, 0% or exempt
VAT has applied across the UAE since 1 January 2018. The Ministry of Finance sets out three treatments:
- Standard rated (5%). Most supplies, including consulting, software and commercial rent.
- Zero rated (0%). No VAT on the invoice, but you can still recover VAT on your costs. Examples: exports outside the GCC, international transport, investment-grade precious metals, the first supply of new homes, designated education and healthcare.
- Exempt. No VAT charged and no recovery of VAT on related costs. Article 46 of the Decree-Law covers specified financial services, residential buildings (sale or lease, other than the zero-rated first supply), bare land and local passenger transport.
Exempt is often worse than 5%, because VAT on your own costs becomes a straight cost. Mixed businesses apportion input tax, a method revised by Cabinet Decision No. 149 of 2026, in force from 1 October 2026.
UAE VAT registration: thresholds and the 30-day clock
Mandatory registration at AED 375,000
Under Article 7 of the VAT Executive Regulation, you count taxable supplies (standard and zero rated) plus imports. You must register if that total went over AED 375,000 in the previous 12 months, or if you expect it to go over in the next 30 days. The second test catches the founder who signs one large contract in month two.
Once you're liable, you have 30 days to apply. If you don't, the FTA can register you back to the date you first became liable, and you owe the VAT on everything you sold in between, charged or not (Article 7(3) and 7(7)).
Voluntary registration at AED 187,500
Between AED 187,500 and AED 375,000 registration is optional. The test also works on taxable expenses, so a start-up with set-up costs but no revenue can register and recover VAT on them, if it shows a UAE business and an intention to make taxable supplies. Once voluntarily registered, you can't deregister for 12 months (Decree-Law Article 23).
Foreign companies with no UAE establishment
A business with no place of residence in the UAE has no threshold at all. It must register if it makes supplies in the UAE and nobody else is obliged to account for the VAT (Decree-Law Article 13(2)). In practice that's mostly sales to UAE consumers, since registered business buyers use reverse charge.
How to register on EmaraTax
FTA services run on EmaraTax, with UAE Pass login. A typical sequence:
- Get a UAE Pass for the manager or authorised signatory, then create the company's taxable person profile.
- Complete the VAT form: licence, owners and managers, bank details, activities, past 12 months' turnover and the 30-day forecast.
- Upload the trade licence, articles, managers' passports and Emirates IDs, and turnover evidence.
- Submit, answer any FTA queries in the portal, and receive your 15-digit Tax Registration Number (TRN).
The document list varies by entity, so treat this as a checklist. The same EmaraTax profile holds your corporate tax registration; see our guide to UAE corporate tax in 2026.
Filing periods and deadlines
The standard tax period is three calendar months. The FTA can assign other lengths, such as monthly (Executive Regulation Article 62). The return and the payment must both reach the FTA by the 28th day after the period ends (Article 64). For a quarter ending 30 September, that's 28 October.
Excess input tax can be refunded or carried forward, but since Federal Decree-Law No. 16 of 2025 took effect on 1 January 2026 it must be used or claimed within five years.
VAT in Dubai free zones: what designated zones change
Most free zones are treated exactly like the mainland for VAT. A short list of zones named by Cabinet decision are "designated zones", which Article 50 of the Decree-Law treats as outside the UAE. Article 51 of the Executive Regulation requires a fenced area with customs controls. The relief is narrow:
- Goods only. Goods moved between designated zones under customs suspension aren't taxed, and goods held in a zone aren't taxed until they're consumed or released into the UAE.
- Services are always inside the UAE. Article 51(6) says the place of supply of any service in a designated zone is the UAE. A consultancy there charges 5% to UAE clients like anyone else.
- Residence. A company established in a designated zone is treated as resident in the UAE for VAT, so it registers on the same thresholds.
The Cabinet amends the list from time to time, so check the FTA's current list before relying on it. For choosing a zone, see how to set up a company in a UAE free zone.
Exports and zero-rating services to EU clients
Services billed to clients back home can be zero rated if Article 31 of the Executive Regulation is met:
- The client has no place of residence in a GCC VAT state and is outside the UAE when the services are performed. A visit under 30 days, unconnected with the work, doesn't count.
- The services aren't directly connected with real estate or movable goods in the UAE.
- No special place-of-supply rule puts them in the UAE (restaurant, cultural or transport services, for example).
The exception that catches holding structures: Article 31(3) removes zero-rating where it's foreseeable that someone in the UAE, such as the foreign client's employee or director, receives the services and couldn't recover the VAT in full. If your German GmbH buys services from your Dubai company, and you, its director, now live in Dubai and receive those services here, look at this rule before you put 0% on the invoice.
Zero-rated sales still count towards the AED 375,000 threshold. A consultancy billing only EU clients usually registers, charges 0% and recovers the 5% it pays locally. Keep the contract and proof of where each client is established.
Reverse charge on imported services
When a UAE taxable person buys services from a supplier abroad who doesn't charge UAE VAT, Article 48 of the Decree-Law treats the buyer as making the supply to itself. You declare 5% output VAT on the return and, if the cost relates to taxable business, recover the same amount as input VAT. The net is usually zero, but both lines must appear.
Typical cases: foreign SaaS, cloud hosting, a European accountant or freelancers abroad. Federal Decree-Law No. 16 of 2025 removed the requirement to issue a self-invoice for reverse-charge imports from 1 January 2026, according to the Ministry of Finance announcement. You still keep the supplier's invoice showing the consideration paid (Executive Regulation Article 48(5)).
Imported services also count towards the registration threshold (Decree-Law Article 19).
UAE VAT penalties after April 2026
Cabinet Decision No. 129 of 2025 rewrote the penalty tables from 14 April 2026, and the FTA confirmed the change the next day. Guides quoting 2% plus 4% a month on late payment are out of date. Current figures, from the Ministry of Finance consolidated text:
| Violation | Penalty (AED) |
|---|---|
| Registration application not filed on time | 10,000 |
| Tax return filed late | 1,000; 2,000 for a repeat within 24 months |
| Tax paid late | 14% a year, charged monthly from the day after the due date |
| Incorrect return | 500, unless corrected before the deadline or by a voluntary disclosure that doesn't change the tax due |
| Voluntary disclosure of an error | 1% a month on the tax difference |
| Error found by the FTA before any disclosure | 15% of the tax difference plus 1% a month |
| Required records not kept | 10,000; 20,000 for a repeat within 24 months |
| Tax invoice or credit note not issued | 2,500 per case |
Disclosing your own mistake costs far less than having the FTA find it.
Mistakes EU founders make in year one
- Assuming a free zone means no VAT. Relief exists only in designated zones, and only for goods.
- Not counting zero-rated exports towards the threshold, or missing the 30-day forward-looking test.
- Zero-rating services that are really received in Dubai by the client's own people.
- Forgetting reverse charge on subscriptions. Leaving it off rarely changes the tax, but it's still an incorrect return.
- Using EU invoice habits. A UAE tax invoice needs your TRN and the VAT in AED (Executive Regulation Article 59), and e-invoicing is coming.
- Treating VAT as separate from structure. Where the company sits, who runs it and where clients are drive VAT, permanent establishment risk and corporate tax together. We look at all three in our business consulting work.
Common questions
What is the VAT rate in the UAE?
The standard UAE VAT rate is 5%, set by Article 3 of Federal Decree-Law No. 8 of 2017 and unchanged since 1 January 2018. Some supplies are zero rated and some exempt. Dubai uses the same federal rate as every emirate.
What is the VAT registration threshold in the UAE?
Registration is mandatory once taxable supplies and imports exceed AED 375,000 over the previous 12 months, or are expected to within the next 30 days. Voluntary registration is possible from AED 187,500 of supplies or taxable expenses.
Do free zone companies pay VAT in Dubai?
Yes, in most cases. Free zone companies register on the same thresholds as mainland ones. Designated zones help only with certain goods; services there are taxed as UAE supplies.
Do I charge VAT to clients in the EU from a UAE company?
Usually not. Services to a client with no residence in the GCC who is outside the UAE when the services are performed can be zero rated under Article 31 of the Executive Regulation. Not if someone in the UAE, such as the client's director, actually receives them.
How long does a UAE company have to register for VAT?
30 days from the date it becomes required to register. If it misses that, the FTA can register it from the date it first became liable, it owes VAT on sales since then, and the late registration penalty is AED 10,000.
To have your own set-up checked, start with the free assessment.
Sources
- Federal Tax Authority, Federal Decree-Law No. 8 of 2017 on Value Added Tax and its amendments (consolidated to Decree-Law No. 16 of 2024), checked 15 October 2026.
- Federal Tax Authority, Executive Regulation of the VAT Decree-Law (Cabinet Decision No. 52 of 2017 and its amendments, to Cabinet Decision No. 149 of 2026), published 10 September 2026, checked 15 October 2026.
- Ministry of Finance, Value Added Tax (VAT), checked 15 October 2026.
- Ministry of Finance, Cabinet Decision No. 40 of 2017 on administrative penalties and its amendments (incl. Cabinet Decision No. 129 of 2025), version 14 November 2025, checked 15 October 2026.
- Federal Tax Authority, Entry into force of the decision amending administrative penalties, 15 April 2026, checked 15 October 2026.
- Ministry of Finance, Amendments to the VAT Executive Regulation (Cabinet Decision No. 149 of 2026), 8 September 2026, checked 15 October 2026.
- WAM (Emirates News Agency), Ministry of Finance to implement VAT law amendments starting January 2026 (Federal Decree-Law No. 16 of 2025), December 2025, checked 15 October 2026.
- Baker McKenzie, United Arab Emirates: VAT and Tax Procedures Law amendments, December 2025 (secondary source, used for the detail of Decree-Law No. 16 of 2025), checked 15 October 2026.