Value added tax (VAT) in the UAE is a tax charged on most goods and services. A registered business collects it from its customers, deducts the tax it paid on its own purchases and pays the difference to the Federal Tax Authority. This article is based on the UAE Government portal (`u.ae`) and the pages of the Federal Tax Authority, checked on 24 October 2026.
Legal basis and rate
The UAE Government portal says VAT was introduced on 1 January 2018 at a rate of 5%. The governing law is "Federal Decree-Law No. 8 of 2017 on Value Added Tax", and its executive regulation is "Cabinet Decision No. 52 of 2017".
Registration
| Topic | What the Federal Tax Authority has said |
|---|---|
| Mandatory registration | Taxable supplies and imports exceeded AED 375,000 over the past 12 months, or are expected to exceed it within the next 30 days |
| Voluntary registration | Taxable supplies, imports or taxable expenses over the past 12 months or the next 30 days exceed AED 187,500 |
| Foreign businesses | The mandatory threshold does not apply to foreign businesses |
| Deadline to apply | Within 30 days of becoming required to register |
| Fee | Free of charge |
| Processing time | 20 business days after the complete application is received |
| Late registration | A penalty under the tax legislation; the service page does not state the amount |
Documents the Federal Tax Authority's service page asks for:
- incorporation documents or partnership agreement;
- commercial registration certificate or a document of the licensing authority;
- trade licence;
- Emirates ID and passport of the owners and authorised signatories;
- a stamped and signed declaration of total taxable supplies and monthly sales;
- power of attorney of the authorised signatory, where needed.
Zero-rated and exempt: an important difference
In practice neither group carries the 5% tax, but their effect is not the same. The Federal Tax Authority's guide says a zero-rated supply is still "taxable" and the supplier can recover the tax on its purchases; a supplier of exempt goods or services cannot recover the tax on the related expenses.
| Group | Examples from the law and official guides |
|---|---|
| Zero-rated | Exports of goods and services outside the GCC implementing states, international transport, the first supply of residential buildings, certain investment precious metals, certain education and healthcare services |
| Exempt | Certain financial services, residential buildings other than the first supply, bare land, local passenger transport |
On residential buildings, the Federal Tax Authority's real estate guide says the "first supply", by sale or by lease, must take place within 3 years of the building's completion date to be zero-rated; later supplies are exempt. So an ordinary residential flat rental usually carries no VAT. See the same guide for the rule on commercial buildings.
Returns and payment
| Topic | What the UAE Government portal has said |
|---|---|
| Tax period | Quarterly for businesses with annual turnover below AED 150 million; monthly for AED 150 million or more |
| Deadline | Usually within 28 days of the end of the tax period |
| Method | Electronically only, through the Federal Tax Authority's EmaraTax portal |
The tourist refund
A foreign tourist can recover the VAT on certain purchases when leaving. The Federal Tax Authority's page, updated on 25 August 2026, sets these conditions:
| Topic | Condition |
|---|---|
| Who | A tourist aged 18 or over who entered on a tourist visa and is not resident in the UAE |
| Minimum purchase | AED 250 excluding VAT per transaction |
| Export validation | Within 90 days of the invoice date, when leaving the UAE |
| Deduction | 13% of the tax amount and AED 3.60 per transaction |
| Maximum cash refund | AED 35,000 |
The UAE Government portal, updated on 30 March 2026, still shows "85 per cent" and a deduction of AED 4.80 per tag. We have used the figure on the Federal Tax Authority's service page, which is newer; when buying, ask the shop for the current figure.
Three worked examples
These examples are hypothetical and only show how the calculation works.
**Example 1: a trading company in Dubai.** Its taxable supplies over the past 12 months reached AED 400,000, so it must register within 30 days. In one quarter:
| Line | Amount |
|---|---|
| Domestic sales before tax | AED 100,000 |
| Output tax, 5% | AED 5,000 |
| Tax paid on purchases of goods | AED 3,000 |
| Amount payable to the Authority | AED 2,000 |
**Example 2: exports.** The same company exports goods worth AED 50,000 to a country outside the GCC. If the export conditions and documents are complete, this sale is zero-rated and the company can still recover the tax on the related purchases.
**Example 3: a tourist.** A tourist buys an item for AED 1,000 plus AED 50 VAT. 13% of AED 50, i.e. AED 6.50, and the AED 3.60 transaction fee are deducted, and about AED 39.90 is refunded.
Practical points
- Check your 12-month turnover every month; crossing the threshold starts the 30-day deadline.
- Voluntary registration can let a new business with high costs recover the tax on its purchases; weigh this with an accountant.
- Keep invoices and export documents; the zero rate needs evidence.
- Corporate tax and VAT are two separate registrations; for corporate tax see our separate article.
Royal Golden does not give tax advice. This article is general information and not tax or legal advice.
Sources
- UAE Government portal, registering for VAT — https://u.ae/en/information-and-services/finance-and-investment/taxation/vat/valueaddedtaxvat (checked on 24 October 2026)
- UAE Government portal, filing VAT returns — https://u.ae/en/information-and-services/finance-and-investment/taxation/vat/filing-a-tax-return-for-vat (checked on 24 October 2026)
- UAE Federal Tax Authority, VAT registration — https://tax.gov.ae/en/services/vat.registration.aspx (checked on 24 October 2026)
- UAE Federal Tax Authority, registration for VAT (topics) — https://tax.gov.ae/en/taxes/Vat/vat.topics/registration.for.vat.aspx (checked on 24 October 2026)
- UAE Federal Tax Authority, VAT refund for tourists — https://tax.gov.ae/en/services/tourist.vat.refunds.aspx (checked on 24 October 2026)
- UAE Government portal, VAT refund for tourists — https://u.ae/en/information-and-services/finance-and-investment/taxation/vat/tax-refund-for-tourists (checked on 24 October 2026)
- UAE Federal Tax Authority, text of Federal Decree-Law No. 8 of 2017 — https://tax.gov.ae/DataFolder/Files/Pdf/VAT-Decree-Law-No-8-of-2017.pdf (via the search index; checked on 24 October 2026)
- UAE Federal Tax Authority, taxable person guide for VAT (June 2018) — https://tax.gov.ae/-/media/Files/EN/PDF/Guides/Taxable-Person-Guide-June-2018.pdf (via the search index; checked on 24 October 2026)
- UAE Federal Tax Authority, real estate VAT guide (April 2021) — https://tax.gov.ae/DownloadOpenTextFile?fileUrl=en%2FVAT_VAT_Guides%2FReal_Estate_Guide%2FReal_Estate_Guide_VATGRE1_EN_19_04_2021_EN.pdf (via the search index; checked on 24 October 2026)