United Arab Emirates government has recently introduced Taxes in the country, wherein excise tax was implemented on 1st October 2017 and Value Added Tax (VAT) on 1st January 2018.

Excise Tax is applicable at a rate of 50% on carbonated drinks and 100% on tobacco & energy drinks.

Value Added Tax (VAT) is applicable at a standard rate of 5%.

Of both the abovementioned taxes in the United Arab Emirates, most of all newly established business are interested in finding out more information on Value Added Tax (VAT).


What is Value Added Tax (VAT)?

Value Added Tax (or VAT) is an indirect tax or sales tax imposed on the goods and services that are bought and sold within the United Arab Emirates. It is also referred to as a type of general consumption tax.

Value Added Tax (VAT) is one of the most common types of consumption tax found around the world. Over 150 countries have implemented VAT (or its equivalent, Goods and Services Tax), including all 29 European Union (EU) members, Canada, New Zealand, Australia, Singapore and Malaysia.

Value Added Tax (VAT) is charged at each step of the ‘supply chain’. The end consumers generally bear the Value Added Tax (VAT) cost while businesses collect and account for the tax, in a way acting as a tax collector on behalf of the government.

A business pays the government the tax that it collects from the customers while it may also receive a refund from the government on the tax that it has paid to its suppliers. The net result is that tax receipts to the government reflect the ‘value add’ throughout the supply chain.


What is the Federal Tax Authority (FTA)?

A public federal authority has been established under the name of Federal Tax Authority which is in charge of managing and collecting federal taxes and related fines, distributing tax-generated revenues and applying the tax-related procedures in force in the United Arab Emirates.


Criteria for VAT Registration

As per the regulation, a business registered Onshore & Free Zone in the United Arab Emirates must compulsorily register for Value Added Tax (VAT) meeting following criteria:

a) Voluntary Value Added Tax (VAT) registration: If business annual turnover is AED 187,000

b) Mandatory Value Added Tax (VAT) registration: If business turnover is AED 375,000 or above


Advantages of VAT Registration

a) Being Value Added Tax (VAT) registered, small businesses can give an appearance of being bigger and more established which gives it a credibility in the market and an appeal in the eyes of other business. This may lead to winning more businesses.

b) It allows a business to reclaim the Value Added Tax (VAT) on most of the goods & services purchased from other businesses.

c) Being Value Added Tax (VAT) registered can help in a B2B relationship for small businesses as many international companies are hesitant to trade with a business who are not VAT registered.


Beyond VAT Registration

Once registered to Value Added Tax (VAT), the business needs to abide by the same rules as any other VAT Registered Business. This means maintaining proper records, invoice and submitting VAT returns every quarter before the deadline to avoid penalties.


We at ADAM Global have an in-house team of qualified and experienced accounting & tax professionals in assisting you in managing your Value Added Tax (VAT) transactions by complying with the VAT laws.

Our Services Includes:

* Assistance in VAT Registration

* Assistance in Filing VAT Returns


For any assistance and further information, please feel free to contact usat +971 50 911 0516 or write to [email protected]


We have a specialist in processing, renewing & cancelling all types of visas including Maid Visa, Family or Dependent Visa, Employment Visa, Ladies work permit and has hands on experience in dealing with government authorities during every stage of the process.  His other expertise are Company Formation including Dubai Mainland or LLC Company, Free Zone Company & Offshore Company, De-registration or Liquidation of Company, VAT Registration & VAT Filing Services.”


Disclaimer: Please note that this information should not be considered the ultimate guidelines, and one should consult with our experts for advice or assistance.