Unsure your business complies with the UAE's tax regulations

VAT in Dubai is a uniform 5% on all taxable goods, services, and imports, with certain exemptions. A taxable supply includes goods or services provided by businesses in Dubai, encompassing retail, restaurant meals, hotels, and entertainment. Most new businesses will fall under taxable supplies.

To see if 5% VAT applies, check if your supplies are zero-rated or exempt. Zero-rated items include exports outside the GCC, international transport, crude oil/natural gas, and precious metals with 99% purity, along with healthcare, education, and newly constructed homes within 3 years of construction. Being "outside of the state" for less than a month or for reasons unrelated to supply can also qualify you for 0% VAT. Unlike exempt VAT, zero-rated supplies require VAT registration and invoicing at 0%.

Exempt services, unlike zero-rated ones, don't require charging VAT. Only four categories are VAT-exempt: financial services (like currency exchange, loans, and insurance when a fee is charged), residential property sales or leases, vacant land, and local public transport across states, including air or water transport. Hotels and movable dwellings like RVs are not exempt.

If none of your taxable supplies are zero-rated or exempt, then you have to charge a 5% VAT. But remember that not all businesses need to register for VAT. There is a minimum threshold you must meet before it’s mandatory.

There is a minimum threshold for those businesses that are required to register for VAT. They must be making taxable supplies or imports of AED 375,000 or more annually.

If you have taxable supplies or import more than AED187,500 worth of goods, you have the choice to register for VAT.

Businesses charge VAT to customers and pay VAT on purchases, with the option to reclaim this Input Tax. Your VAT liability equals the VAT collected minus the Input Tax on purchases. For instance, if you buy and sell computer tablets with a 5% VAT, you can reclaim VAT paid on purchases to avoid double taxation, ensuring VAT is charged only to the end-user. Remember that you can’t recover VAT if you provide exempt services.

You need to register for VAT with the FTA in Dubai by first creating an e-service account using a valid email. After account creation, begin VAT registration on the FTA's portal, providing necessary contact and banking details, and submitting required documents. Upon approval, the FTA assigns a unique Tax Registration Number for accessing the VAT portal.

It's crucial to monitor your taxable supplies to ensure timely registration upon reaching the minimum threshold, avoiding unintentional non-compliance. VAT returns must be filed online within 28 days after each tax period, determined by your annual turnover: businesses with less than AED 150 million turnover file quarterly, while those above file monthly, facilitating smooth VAT payments.

Submit VAT returns online to the FTA at each tax period's end, detailing your taxable supplies and VAT due. Quarterly returns are due by the 28th of the following month; late submissions incur AED 1,000 penalty initially, then AED 2,000 for subsequent delays. Late payments attract a 2% penalty for the first 7 days, increasing to 4%, and 1% daily after a month, up to 300% of the due VAT. Zero-rated supplies also require VAT returns, subject to late penalties. VAT payments can be made online via the FTA website using credit card, eDebit, or bank transfer, ensuring timely and flexible payment options.