UAE VAT

1.Rate:

The standard rate of VAT in the UAE is 5%. This applies to most goods and services unless specifically exempted or subject to a zero rate.

2.Registration Threshold:

Businesses with annual taxable supplies exceeding AED 375,000 must register for VAT. However, voluntary registration is also possible for businesses below this threshold.

3.Exemptions and Zero-Rated Supplies:

Some goods and services are exempt from VAT, such as residential property leases, local passenger transport, and certain financial services. Zero-rated supplies include exports of goods and international services.

4.VAT Return Filing:

Registered businesses are required to file VAT returns with the Federal Tax Authority (FTA) regularly, usually quarterly. Returns include details of sales, purchases, and the VAT due or reclaimable.

5.VAT Invoicing:

VAT-registered businesses must issue tax invoices for taxable supplies made to other businesses. Invoices must meet specific requirements outlined by the FTA.

6.VAT Groups:

Related businesses can register as a VAT group, allowing them to be treated as a single taxable person for VAT purposes, simplifying accounting and compliance.

7.Penalties and Enforcement:

Failure to comply with VAT regulations can result in penalties, including fines and suspension of VAT registration. The FTA conducts audits and investigations to ensure compliance with VAT laws.

8.VAT Refunds:

Certain businesses and individuals may be eligible to claim VAT refunds for specific expenses, such as business-related expenses incurred in other GCC countries.