VAT basics every new UAE business should know

Value Added Tax (VAT) has applied in the UAE since 2018 at a standard rate of 5%. For a new business it is straightforward once you know the thresholds and what to put on an invoice. This is a plain-English primer, not tax advice — confirm specifics with a registered tax agent.

When you must register

• Mandatory: once your taxable turnover passes AED 375,000 in a 12-month period.
• Voluntary: you can register from AED 187,500 of turnover or expenses, which lets you reclaim input VAT early.

What a compliant tax invoice needs

• The words "Tax Invoice", your name and TRN (Tax Registration Number).
• Invoice date and a unique number.
• A description, the net amount, the 5% VAT amount, and the total.
• The customer's details (and TRN for B2B where required).

Returns and records

Most businesses file VAT returns quarterly through the Federal Tax Authority portal, paying the VAT you collected minus the input VAT you paid. Keep records for at least five years.

Free zone and the bigger picture

VAT applies across the UAE, including most free zones (designated zones have specific rules for goods). Separately, corporate tax is 9% on profits above AED 375,000, with qualifying free-zone income potentially at 0% when conditions are met.

A serviced office at HIVE issues fully compliant tax invoices with our TRN, and our business-setup team can guide your VAT and corporate-tax registration as part of your company formation.