UAE VAT is crucial for businesses, with a standard rate of 5% on most goods/services. Zero-rated supplies allow input VAT recovery, while exempt supplies incur hidden costs. Compliance and documentation are essential for strategic business insights.
UAE VAT Rates Overview
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Other countries
Author: Ema Stamenković
Category:
General information
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Content accuracy validation date:
23.01.2026
Content accuracy validation time:
10:03h
Value-Added Tax (VAT) is essential for businesses in the UAE. Understanding rates and compliance impacts your bottom line.
Standard Rate: 5%
Applies to most goods and services (e.g., electronics, hospitality, utilities, private transport, commercial rents) and imports. VAT-registered businesses can generally reclaim input VAT to manage costs and cash flow.
Zero-Rated Supplies: 0% VAT (with Input Recovery)
Taxable at 0%, but businesses reclaim input VAT. Requires full compliance (invoices, documentation, filings). Key examples:
- Exports of goods/services outside the GCC
- International transport of passengers/goods
- Supply of aircraft, ships, or land transport vehicles
- First-time supply of residential properties (within three years of completion)
- Select education and healthcare services
Exempt Supplies: No VAT, No Input Recovery
Outside the VAT system—no VAT charged, but input VAT cannot be reclaimed, creating hidden costs. Common examples:
- Most financial services (e.g., interest, insurance premiums)
- Sale or rent of residential buildings (after initial supply)
- Bare land
- Local passenger transport (e.g., buses, taxis)
Key Comparison
|
VAT Category |
Examples |
VAT Charged |
Input VAT Recovery |
|
Standard (5%) |
Retail, utilities, services, imports |
Yes |
Yes |
|
Zero-Rated (0%) |
Exports, international transport, first residential supply, eligible healthcare/education |
No |
Yes |
|
Exempt |
Residential rent/sale (post-initial), financial services, bare land, local transport
|
No |
No |
Strategic Business Insights
- Pricing: Exempt supplies carry hidden (irrecoverable) input VAT costs.
- Cash Flow: Zero-rated supplies allow input credit claims—vital for exporters, healthcare/education providers.
- Audit Readiness: Zero-rated/exempt supplies need robust documentation; FTA requires strict adherence.
- Planning: Segregate categories in accounts, invoicing, and returns for accurate compliance.
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