Understanding UAE Value Added Tax (VAT)
Value Added Tax (VAT) was introduced in the UAE at a standard rate of 5% on January 1, 2018. It applies to most transactions in goods and services.
VAT Registration Thresholds
- Mandatory Registration: Businesses with taxable supplies and imports exceeding AED 375,000 annually must register.
- Voluntary Registration: Businesses with supplies exceeding AED 187,500 may choose to register voluntarily.
Invoicing & Input Tax Recovery
Registered businesses charge 5% VAT on invoices and file periodic VAT returns. They can reclaim VAT paid on business expenses (known as Input Tax Recovery).
Action Plan: Separate Tax Values
- Keep Valid Tax Invoices: To claim VAT credits, you must keep valid VAT invoices showing the supplier's Tax Registration Number (TRN).
- Calculate VAT: Use our UAE VAT (5%) Invoice Calculator to add or extract VAT values.
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