The rate and what it covers
Article 3 of Federal Decree-Law No. 8 of 2017 sets a standard rate of 5% on every supply and import, subject to the zero-rating (Article 45) and exemption (Article 46) provisions.
| Type | Treatment |
|---|---|
| Standard-rated supply | 5%, input VAT recoverable |
| Zero-rated supply | 0%; still a taxable supply that counts toward the threshold |
| Exempt supply | No VAT; related input VAT is usually not recoverable |
Registration thresholds
| Threshold | Test | |
|---|---|---|
| Mandatory | AED 375,000 | Taxable supplies and imports exceed it over the previous 12 months, or are expected to in the next 30 days |
| Voluntary | AED 187,500 | Taxable supplies and imports, or taxable expenses, exceed it over the previous 12 months, or are expected to in the next 30 days |
- Article 7 of the Executive Regulation requires the registration application within 30 days of becoming required to register; if you don't apply, the FTA registers you from the date registration became due.
- The FTA states the mandatory threshold does not apply to foreign (non-resident) businesses.
Threshold example
A Sharjah shop with taxable sales of AED 400,000 over the last 12 months has passed AED 375,000, so it must register and apply within 30 days. Another shop at AED 200,000 does not have to register, but it is above AED 187,500 and may register voluntarily to recover VAT on its purchases.
How to calculate VAT
- Adding VAT: AED 20,000 × 5% = AED 1,000; total AED 21,000.
- Extracting VAT from an inclusive price: inclusive price × 5 ÷ 105; 21,000 × 5 ÷ 105 = AED 1,000.
Try both in the VAT calculator with the UAE selected.
Quarterly example
A small Dubai distributor, January to March, figures before VAT:
| Item | Amount | VAT 5% |
|---|---|---|
| Taxable sales | AED 600,000 | AED 30,000 (output) |
| Taxable purchases with valid tax invoices | AED 240,000 | AED 12,000 (input) |
| VAT payable | AED 18,000 |
The return is filed and AED 18,000 paid so that both reach the FTA by 28 April.
The tax invoice
A tax invoice must be issued within 14 days of the date of supply (Article 67 of the Decree-Law). Article 59 of the Executive Regulation sets its contents:
| Full tax invoice | Simplified tax invoice |
|---|---|
| The words "Tax Invoice" clearly displayed | The words "Tax Invoice" clearly displayed |
| Supplier's name, address and TRN | Supplier's name, address and TRN |
| Buyer's name, address and TRN if registered | |
| Sequential or unique invoice number | |
| Date of issue, and date of supply if different | Date of issue |
| Description of goods or services | Description of goods or services |
| Per line: unit price, quantity, VAT rate and amount in AED | Total consideration and VAT charged |
| Any discount, gross total and VAT in AED, with the exchange rate when converting from another currency | |
| A reverse-charge statement where the buyer accounts for VAT |
A simplified tax invoice is allowed when the buyer is not registered, or is registered and the supply does not exceed AED 10,000. To compare with other countries' rules, read tax invoice vs simplified invoice.
Tax periods and returns
- The standard tax period is three calendar months (Article 62 of the Executive Regulation); the FTA can assign shorter or longer periods. The UAE Government portal says the period is monthly for businesses with annual turnover of AED 150 million or more.
- Deadline: the return must reach the FTA no later than the 28th day after the period ends, and payable VAT must be received by the same date (Article 64).
- How to file: electronically on EmaraTax.
| Quarterly tax period | Last day to file and pay |
|---|---|
| January – March | 28 April |
| April – June | 28 July |
| July – September | 28 October |
| October – December | 28 January |
Your period may end in different months depending on what the FTA assigned at registration; check your registration certificate.
What to prepare before filing
- Standard-rated, zero-rated and exempt sales, each separately.
- Taxable purchases and expenses with their VAT, backed by valid tax invoices in your company's name.
- Imports and supplies where you account for VAT yourself (reverse charge), if any.
- Credit and debit notes issued in the period.
- Corrections of any error in an earlier return, following the FTA's procedures.
E-invoicing in the UAE
The Ministry of Finance issued Ministerial Decision No. 244 of 2025 to roll out the Electronic Invoicing System in phases through Accredited Service Providers (ASPs):
| Group | Appoint an ASP by | Mandatory go-live |
|---|---|---|
| Voluntary adoption | Available from 1 July 2026 | |
| Revenue of AED 50 million or more | 30 October 2026 (after the May 2026 amendment; originally 31 July 2026) | 1 January 2027 |
| Revenue below AED 50 million | 31 March 2027 | 1 July 2027 |
| Government entities | 31 March 2027 | 1 October 2027 |
The decision states that business-to-consumer (B2C) transactions are not subject to the system until a ministerial decision says otherwise. Follow the Ministry of Finance website for updates.
Common mistakes
- Counting exempt sales toward the threshold: it is based on taxable supplies (including zero-rated) and imports.
- Issuing a simplified invoice to a registered buyer for more than AED 10,000.
- Invoicing late, more than 14 days after the supply.
- Leaving the return to the last day, when payment must arrive by the same date.
Summary
The rate is 5%; registration is mandatory above AED 375,000 and voluntary above AED 187,500; invoices are due within 14 days with the Article 59 details; and returns and payment are due by the 28th day after each period (usually quarterly). Start preparing now for the e-invoicing phase that matches your revenue.