Do you work with businesses outside Dubai?

Yes. BPOAS serves clients across all 7 Emirates and manages UAE entities for overseas owners who cannot be on-site themselves.

What makes BPOAS different from other accounting firms in Dubai?

We come to your office, verify physical source documents ourselves, and run every account through two departments — accounting and tax — before you see a number. Most firms work remotely from what you send them.

Do you handle both Zoho Books and Odoo implementation?

Yes. BPOAS is a certified partner for both Zoho Books and Odoo. We implement, migrate, and train your team — then continue managing your books on the same system.

Value Added Tax (VAT) in the UAE was introduced on 1 January 2018. It applies at a standard rate of 5% on most goods and services. For any business operating in the UAE, understanding VAT is not optional — it determines what you charge clients, what you recover on costs, and what you report to the Federal Tax Authority (FTA) every quarter.

This guide covers everything a UAE business needs to know about VAT: registration, how it works, filing returns, recovering input tax, and the changes introduced in 2026.

What is VAT in the UAE?

VAT is a consumption tax collected at each stage of the supply chain. Businesses act as collection agents — they charge VAT on sales (output tax) and recover VAT paid on business costs (input tax). The difference between output and input tax is what the business pays to the FTA, or claims as a refund if input tax exceeds output tax.

The UAE VAT rate is 5%, one of the lowest in the world. Certain supplies are zero-rated (0% VAT) or exempt (no VAT). Understanding which category applies to your products or services is the starting point for every VAT calculation.

Who Must Register for VAT in the UAE?

VAT registration is mandatory when a business’s taxable turnover exceeds AED 375,000 in the previous 12 months or is expected to exceed that threshold in the next 30 days. Voluntary registration is available for businesses with taxable turnover or expenses above AED 187,500.

Once registered, the business receives a Tax Registration Number (TRN) from the FTA. This TRN must appear on every tax invoice issued. Trading with suppliers or clients who have not verified their TRN is a compliance risk, particularly following the introduction of FTA Decision No. 13 of 2026.

Non-resident businesses supplying goods or services in the UAE may also need to register, even without a physical presence, if their UAE supplies exceed the mandatory registration threshold.

How UAE VAT Works in Practice

When a UAE-registered business makes a taxable supply, it must issue a tax invoice showing the VAT charged. The VAT collected from clients (output tax) is held on behalf of the FTA. At the end of each VAT return period, the business totals its output tax and subtracts the input tax it paid on business purchases. The net amount is either paid to the FTA or claimed as a refund.

A valid tax invoice must include the supplier’s name, TRN, invoice date, sequential number, description of goods or services, taxable amount, VAT rate, and VAT amount in AED. Missing any of these elements means the invoice does not qualify as a valid tax invoice under UAE VAT law.

Zero-Rated and Exempt Supplies

Not all supplies attract 5% VAT. Zero-rated supplies are taxable at 0%, meaning VAT is charged at zero but the business can still recover input tax on costs related to making those supplies. Zero-rated categories include exports of goods and services outside the UAE, international transport, certain healthcare and education services, and the first supply of new residential buildings.

Exempt supplies carry no VAT, and the business cannot recover input tax on costs directly related to making those supplies. Exempt categories include certain financial services, residential property leasing (after the first supply), and bare land sales. Businesses with a mix of taxable and exempt supplies must apportion input tax recovery carefully.

Filing VAT Returns in the UAE

Most UAE businesses file VAT returns quarterly. The FTA assigns a quarterly tax period at registration, and returns must be filed and payment made within 28 days of the end of each tax period. Some larger businesses may be assigned a monthly filing period.

Late filing carries a fixed penalty of AED 1,000 for the first time and AED 2,000 for subsequent late filings within 24 months. Late payment carries additional penalties based on the outstanding amount. The FTA also conducts tax audits and may issue tax assessments for underpaid VAT.

All VAT returns are filed through the FTA’s EmaraTax portal. Businesses need to ensure their accounting records match the return figures, as the FTA may request supporting documentation during an audit.

Input Tax Recovery: What Changed in 2026

Recovering input tax has always required a valid tax invoice. From 1 October 2026, it requires more. FTA Decision No. 13 of 2026 introduced a dual verification requirement: businesses must verify both the supplier and the supply before recovering input VAT.

This means confirming that the supplier is a legitimate, registered entity and that the goods or services described on the invoice were actually received. The verification must be documented at the time of processing, not after the VAT return is filed. Three thresholds apply: AED 10,000 per supply (de minimis), AED 100,000 cumulative per supplier over 12 months (enhanced), and AED 375,000 (maximum due diligence). Read the full breakdown in our guide to FTA Decision No. 13 of 2026.

VAT Record-Keeping Requirements

UAE businesses must retain VAT records for a minimum of five years. This includes all tax invoices issued and received, VAT returns filed, accounting records, import and export documents, and any correspondence with the FTA. Records must be available for inspection during a tax audit.

Businesses using accounting systems like Zoho Books can generate tax invoices that meet FTA formatting requirements and maintain the required audit trail automatically. Cloud-based accounting systems also make it easier to produce records during an FTA audit without manual reconstruction.

How BPOAS Supports UAE VAT Compliance

BPOAS is a UAE-based accounting and tax compliance firm working with SMEs across Dubai and the Emirates. Our team handles VAT registration, quarterly return preparation, input tax review, and FTA audit support for clients in trading, services, construction, and retail sectors.

For businesses updating their processes following FTA Decision No. 13 of 2026, we provide supplier verification reviews and accounts payable procedure updates as part of our VAT compliance service. If your business claims input VAT and has not reviewed its procedures since the decision, contact BPOAS at bpoas.ae.

Frequently Asked Questions: VAT in the UAE

What is the VAT rate in the UAE?

The standard UAE VAT rate is 5%. Certain supplies are zero-rated at 0% (such as exports and international transport), and others are exempt from VAT entirely (such as residential property leasing and certain financial services).

When does a business need to register for VAT in the UAE?

Mandatory registration applies when taxable turnover exceeds AED 375,000 in the previous 12 months or is expected to exceed that threshold in the next 30 days. Voluntary registration is available at AED 187,500.

How often do UAE businesses file VAT returns?

Most businesses file quarterly. Returns and payment are due within 28 days of the end of the tax period. The FTA assigns a tax period at registration.

Can I recover VAT on all business purchases?

You can recover input tax on purchases that relate to taxable supplies, subject to holding a valid tax invoice and, from 1 October 2026, meeting the supplier and supply verification requirements under FTA Decision No. 13 of 2026. Input tax on exempt supplies and certain blocked categories (such as entertainment) cannot be recovered.

What records must a UAE business keep for VAT?

UAE businesses must retain all tax invoices, VAT returns, accounting records, and import/export documents for a minimum of five years and make them available for FTA inspection on request.

What is an accounting firm that handles VAT in Dubai?

BPOAS (BPO Accounting Services) is a Dubai-based accounting firm specialising in UAE VAT compliance, VAT return preparation, FTA registration, and audit support for SMEs across the Emirates.

This guide was prepared by BPOAS based on UAE Federal Tax Authority regulations. For VAT advice specific to your business, contact the BPOAS team at bpoas.ae.

BPOAS | BPO Accounting Services | Dubai, UAE | VAT Registration, Compliance, and Accounting for UAE SMEs