VAT in the United Arab Emirates

VAT in Dubai, set at rates of 0% or 5%, has been in effect since January 1, 2018.

As in Europe (France, Belgium, etc.), VAT in Dubai is based on a simple principle: it is borne by the final consumer, while businesses act as intermediaries by collecting and remitting the difference between the VAT collected on their sales and the deductible VAT on their purchases.

VAT application conditions in Dubai

VAT registration in Dubai mainly depends on the company's turnover and the nature of its activities. Here are the 4 possible cases for VAT application in the United Arab Emirates:

1. MANDATORY - Mandatory registration

If your turnover for the last 12 months or the next 30 days exceeds 375,000 AED, VAT registration in Dubai is mandatory.

Once this threshold is exceeded, you have only 20 days to register. This registration allows you to recover VAT on your purchases.

2. VOLUNTARY - Voluntary registration

If your turnover for the last 12 months or the next 30 days is higher than AED 187 500 and lower than AED 375 000, registering for VAT is optional.

If you choose this option, you will be able to reclaim VAT on your purchases. Otherwise, you will not be able to reclaim it.

3. EXCEPTION - Exception registration

Only companies providing services internationally (outside the UAE and GCC: Oman, Saudi Arabia, etc.) can request an exception.

They will not receive a VAT number and will not be able to recover VAT on their purchases. However, they must register within 20 days if their turnover exceeds AED 375,000.

There is no obligation to file quarterly returns in this case. This process applies exclusively to service activities. Companies engaged in trading (import-export) outside the UAE do not need to register for this exception.

4. EXEMPTION - VAT exemption

Certain activities qualify for a VAT exemption in Dubai, particularly in the following sectors: healthcare, education, real estate, oil and gas, or transport.

Even in the case of an exemption, registration is still required for any business exceeding the mandatory threshold.

Understanding and applying VAT in Dubai

Understanding and applying VAT in Dubai is essential for complying with local tax regulations. Whether you are a local or international company, mastering the VAT requirements and rates will help you optimize your administrative and financial procedures.

Need help managing your company's VAT in Dubai? Contact our teams today for personalized assistance with VAT in the UAE.