My annual turnover is just above AED 375,000. Do I have to register for VAT?+
Yes. Mandatory VAT registration is required once your taxable supplies and imports exceed AED 375,000 in any 12-month period (or are expected to within the next 30 days). If you miss the deadline, FTA can back-date registration and charge penalties. Voluntary registration is available if your turnover exceeds AED 187,500.
How do I reverse-calculate VAT from a VAT-inclusive price?+
Divide the total price by 1.05 to get the net (ex-VAT) amount. The VAT portion is the total minus that net. Example: AED 10,500 total ÷ 1.05 = AED 10,000 net; AED 500 VAT. You can use the reverse-calculate tab in our
UAE VAT Calculator.
Does my UAE free zone company need to charge VAT?+
It depends on whether your free zone is a Designated Zone under the VAT law. Supplies of goods between Designated Zones are treated as outside UAE territory (no VAT). However, services supplied from a Designated Zone to mainland UAE are subject to 5% VAT. Most free zones (DIFC, ADGM, DAFZA, etc.) are not Designated Zones — companies there are treated the same as mainland for VAT purposes.
Can I reclaim input VAT on a car purchased for business use?+
Generally no. Input VAT on motor vehicles intended for personal use is blocked under Article 53 of the UAE VAT Executive Regulations. This applies even if the car is registered to your company. Exceptions exist for vehicles used exclusively for a defined business purpose — for example, taxi operators, driving schools, or ambulance services. Consult a tax advisor before claiming.
What is the penalty for late VAT registration in the UAE?+
The standard penalty for failing to register on time is AED 20,000. Under Cabinet Decision 129/2025 (effective 14 April 2026), late payment penalties on any VAT due are now 14% per annum (replacing the old 2%+4%/month structure). If you self-disclose before an FTA audit, the voluntary disclosure penalty is 1% per month on the unpaid tax.
Does a TRN have to appear on every invoice?+
Yes — any invoice where VAT is charged must be a valid tax invoice and must include: your TRN (Tax Registration Number), the customer's TRN if they are VAT-registered and the supply exceeds AED 10,000, date of supply, a description of goods/services, the VAT amount charged, and the gross amount payable. Invoices missing the TRN cannot be used by the recipient to recover input VAT.
Are services I export to a client outside the UAE subject to VAT?+
Exported services are zero-rated (0% VAT) if the customer is outside the UAE and the benefit of the service is received outside the UAE. You still charge 0% and can recover related input VAT. However, if the customer is outside the UAE but the benefit of the service is received inside (e.g., a foreign company hiring you to renovate their UAE office), standard 5% VAT applies.
How long do I need to keep VAT records in the UAE?+
The FTA requires businesses to retain all VAT-related records — tax invoices, credit notes, import/export documents, bank statements, and VAT returns — for a minimum of 5 years. For real estate transactions the retention period is 15 years. Records can be kept electronically provided they are readily accessible and in the original format.
Can a sole trader or freelancer register for VAT?+
Yes. Individual freelancers and sole traders are eligible to register for VAT if their taxable turnover exceeds the registration threshold. You register as a natural person under your Emirates ID. Once registered, you must issue tax invoices, file quarterly VAT returns, and remit VAT collected to the FTA. Many UAE freelancers on platforms like Fiverr or Upwork reach the threshold faster than they expect.
What is the difference between zero-rated and VAT-exempt supplies?+
Both carry 0% VAT to the customer, but the treatment differs critically for input VAT recovery. Zero-rated supplies (e.g., exports, international transport, most food items, healthcare, new residential property) are taxable supplies — you can recover all related input VAT. Exempt supplies (e.g., bare land, certain financial services, subsequent residential property sales) are not taxable — you cannot recover input VAT incurred on costs directly related to exempt revenue. Mixing both creates a partial exemption calculation.
