Frequently Asked Questions

  What Is VAT?

A Value added tax (VAT) is a consumption tax placed on a product whenever value is added at each stage of the supply chain, from production to the point of sale.

  What is standard rate of VAT in UAE?

A standard rate of 5% will be levied on all taxable supply of goods and services in the state including imports.
Standard Rate: 5%
Exempt Supplies: Nil
Zero-Rated Supplies: 0%

  What is Thresh hold limit for vat registration in UAE?

Compulsory Registration threshold: AED 37,5000p.a
Voluntary Registration threshold: AED 18,7500p.a

  What is mandatory Registration?

According to the UAE Ministry of Finance, a business must register for VAT if their taxable supplies and imports exceed the mandatory registration threshold of AED 37,5000.

  Is it mandatory to file VAT return if TRN is allotted?

Yes, it is mandatory to file VAT return, even if there is no taxable

  Is there any penalty on non-filing of VAT return?

A minimum penalty of 500 AED, but not more than triple of the tax value in question, will be levied on any kind of tax violation.
If a VAT registrant fails to file a tax return within the specified timeline, he will pay AED 1,000 in fine for the first offense and AED 2,000 for repetition within 24 months.

  What is due date for filing VAT return?

Due date to file VAT return is 28th of following month, when quarter ends.

  How to make payment for VAT?

There are 3 ways to pay your VAT returns:
• With an e-Dirham Card or a credit card (Visa & Master card only)
Charges for payment through e-Dirham card -AED 3 per transaction
Charges for payment through credit card- 2-3% of the payment.
• with a bank transfer or
Each taxable person is provided with unique identification number called a GIBAN, which can be used to make a bank transfer, just add GIBAN as beneficiary.
• witheDebit.
This mode of payment takes time. This option works only for taxable persons who have access to certain retail or corporate online banking.

  Can TRN be de registered if supply of below threshold limit?

Yes. Only If they meet the following conditions:
• The registered person no longer makes taxable supplies.
• The value of their supplies is less than the registration threshold of AED 18,7500 over a period of 12 consecutive months.
• The value of their taxable supplies is less than the mandatory threshold of AED 37,5000 over a period of 12 months

  Is it mandatory to keep records/ invoices of business?

Under the Federal Tax Law, all businesses in the UAE will need to record their financial transactions and ensure that their financial records are accurate and up to date.

  What is Tax Group?

A group of two or more persons registered with the FTA as a single taxable person subject to fulfilment of conditions under the UAE VAT Law.

  Whether separate return is filed for all companies in Tax Group?

No. All the entities within a VAT group will be treated as one entity for VAT purpose. Compliance reporting like VAT returns are required to be prepared and reported at the group level instead of entity level.

  What is Input Tax Credit?

This means that aperson can reduce the value of input tax eligible for recovery from the tax payable and only pay the balance amount as tax . This ensures that tax is paid only on the value added at each stage in the supply chain.