How vat / sales tax works in United Arab Emirates
UAE VAT runs at a single 5% rate on most taxable supplies, with businesses charging output VAT, recovering input VAT, and filing electronic returns with the Federal Tax Authority.
Registration is mandatory once taxable supplies and imports pass AED 375,000 in the prior twelve months or are expected to pass it in thirty days, with voluntary registration from AED 187,500.
Zero-rating covers exports, international transport, qualifying healthcare and education, and investment-grade precious metals, while virtual-asset transfers and swaps are VAT-exempt retroactive to January 2018.
Tax rates at a glance
- Standard VAT
- 5%
- Zero-rated supplies
- 0%
- Exempt supplies
- Exempt
- Mandatory threshold
- AED 375,000
- Voluntary threshold
- AED 187,500
- Virtual-asset transfers
- Exempt
Who benefits most
These profiles tend to benefit most when the rules match their real residence, payroll and business setup.
E-commerce sellersFreelancersFoundersFree-zone companiesCross-border traders
Watch out for
- Gulf VAT is a consumption tax, not an income tax: the 5% rate says nothing about profits, which now fall under the separate 9% corporate-tax regime for in-scope businesses.
- Free-zone status does not automatically remove VAT duties, because designated-zone and qualifying-activity rules decide each supply rather than the company label.
- Exempt virtual-asset transfers block related input VAT recovery, so crypto businesses need an approved apportionment method instead of assuming full deduction.
- Tourist-refund, new-residence, and designated-zone paperwork each carry deadlines and document tests that fail silently when invoices lack the required fields.
Frequently asked questions
What is the VAT rate in the UAE?
The UAE applies a single 5% VAT rate in 2026. Zero-rating covers defined categories such as exports and qualifying healthcare and education, while financial services and local passenger transport are largely exempt.
When must a UAE business register for VAT?
Mandatory registration applies once taxable supplies and imports exceed AED 375,000 over twelve months or are expected to do so within thirty days. Voluntary registration starts at AED 187,500.
Is crypto subject to UAE VAT?
Virtual-asset transfers and exchanges are VAT-exempt under FTA clarification VATP040, retroactive to January 2018. Fee-based custody and related services can still carry VAT consequences.