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What you should know about VAT in Dubai

September 14, 2022
Author
Amal Eeckhout
vat in dubai

How does VAT work in Dubai?

VAT or Value Added Tax is a tax on the consumption or use of your sold goods and services. This usually gets paid by the customer on every purchase they make and is considered an indirect tax. The company needs to collect this tax and return it to the government, which means that prices will be slightly higher for the services or goods that weren't obligated to any taxes in the first place. It is obligated to defer this back to the government to avoid any fines or even criminal charges. Some of these services and goods aren't liable for this, and these are:

  1. Local passenger transportation
  2. Land plot sales
  3. Financial services
  4. Sale of residential properties by realtor

VAT in Dubai rates at 5%, and this gets applied to all taxable goods and services. Some of these services do get excused from this, so it could be that your company isn't liable. Some of these services are:

  1. Education
  2. Healthcare
  3. Supply or Residential properties
  4. Precious material investments
  5. Exports
  6. International transportation

Remember that if you offer a non-taxable service you still have to register for VAT with the government and still provide an invoice with a 0% VAT.

Background of VAT in Dubai

As of the 1st of January 2018 VAT first came to Dubai, this was due to the suggestion of the International Monetary Fund which stated that the federal state had no base income that could be controlled.

They decided that it should be applied to all online and store purchases, this became the first time that there was any VAT in the Middle East.

Aside from that, the government of the United Arab Emirates are negotiating with the United States, the European Union, China and Australia on the disappearance of custom duties minimizing the income generated by different countries in the UAE.

vat in dubai uae


VAT requirements

First and foremost you will need a VAT number, you can only apply for this if you possess a tax identification number. This gets obtained together with a Certificate of Incorporation and is issued by the Trade Register in Dubai. Based on this, your company will be issued a VAT Certificate.

When you want to register VAT in the UAE there are some documents you will need to have prepared, these are:

  • Business License - The company's Memorandum and Articles of Association
  • Registered address of the company in the UAE
  • Income statement for the last 12 months
  • Import-export activities of the company 

The VAT registration can also be done online through the government's portal, this whole procedure could be a prickly journey for many business owners, but with the help of our experts, this is made fairly easy for everyone to do so.