VAT Rate Lists in the UAE Complete Guide for 2025
The standard VAT rate in the UAE is 5%, applicable to the majority of taxable supplies of goods and services, including business-to-business (B2B) transactions, imports, and commercial sales. The administration, collection, and enforcement of VAT are overseen by the Federal Tax Authority (FTA). Businesses are required to register for VAT and begin charging it if their taxable supplies or imports exceed AED 375,000 within a 12-month period. This article provides an overview of the VAT rate in the UAE and outlines the different types of VAT rates applicable.
There are three general types of VAT rates in the UAE. These include:
The general VAT rate is 5%. It is applied to the majority of goods and services provided in the UAE. Common day-to-day examples of standard-rated items are:
Businesses that provide such products and services have to levy 5% VAT on their expense and submit VAT returns monthly or quarterly, depending on their turnover.
Zero-rated VAT is a taxable product or service at 0% rate. Suppliers do not need to levy VAT on such products even though they charge it to suppliers for associated expenses. Examples of zero-rated products include:
It should be realized zero-rated vs. exempt supplies for some intentions when, for example, submitting VAT returns or computing recoverable input VAT.
Exempt supplies receive no VAT, and their suppliers also are unable to recover input VAT on connected expenditure. The VAT treatment of this nature happens in sectors like:
Below is a detailed UAE VAT rate list showing the manner in which the different categories of VAT rates in the UAE are applicable to all sectors:
| Sector | VAT Treatment | VAT Rate |
| Retail and Consumer Goods | Standard | 5% |
| Real Estate – First Sale of Residential Property | Zero-Rated | 0% |
| Real Estate – Subsequent Sales or Rentals | Exempt | 0% |
| Education (approved institutions) | Zero-Rated | 0% |
| Private Tutoring or Non-approved Institutions | Standard | 5% |
| Healthcare (approved services) | Zero-Rated | 0% |
| Cosmetic or Non-essential Medical Services | Standard | 5% |
| Transport (international flights, sea freight) | Zero-Rated | 0% |
| Local Transport (public buses, metro) | Exempt | 0% |
| Financial Services (fee-based) | Standard | 5% |
| Financial Services (margin-based) | Exempt | 0% |
| Oil & Gas (crude oil and natural gas) | Zero-Rated | 0% |
| Entertainment Services | Standard | 5% |
The types of vat rates in the UAE help businesses categorize their supplies accurately and apply the correct VAT rate when issuing tax invoices or filing returns.
The UAE VAT rate significantly impacts how businesses operate, especially management of finance, accounts, and price to customers. The reasons are as follows:
Any enterprise liable to tax with turnover and imports of more than AED 375,000 per year is required to register for VAT. Any enterprise with turnover of more than AED 187,500 per year may voluntarily register for VAT.
They will be required to issue VAT-compliant tax invoices in respect of all zero-rated and standard-rated supplies. They will be required to maintain proper bookkeeping for accounting for VAT on purchases and sales and reporting them accordingly.
Quarterly or monthly VAT returns are to be filed online, depending on the size of business, on the FTA portal. Incomplete or late filing will incur administrative charges.
Companies are able to recover input VAT they pay on business expenditure recoverable (input VAT), keeping their net tax bill lower. VAT on expenditures on exempt supplies or private use is not recoverable in general.
Also Read: Guide on Zero-Rated and VAT-Exempt in UAE
The difference is in recovering input VAT:
This must be well understood while calculating VAT liabilities and preparing accounts.
There are also UAE designated zones in most instances Free Zones which, for VAT purposes, are treated as being outside the UAE. Supplies made from within such zones do not attract VAT on certain conditions.
But if a supply is exported in the UAE or on the mainland, there are standard rules that apply to VAT. Free Zone businesses must pay close attention to looking at FTA guidelines so that they can be sure of what their VAT is.
VAT offenses can potentially lead to heavy monetary penalties. Some of the commonly faced violations are:
Firms can avoid these fines if they remain compliant with VAT laws and ensure proper documentation is maintained.
The UAE VAT framework comprises three primary categories; standard-rated, zero-rated, and exempt supplies. It is therefore imperative for businesses to assess their operations carefully and apply the appropriate VAT treatment to their supplies. To primarily determine taxability and ensure compliance with VAT regulations in UAE, it is advisable to seek the expert services of premier from VAT Registration UAE.
The standard rate of VAT in the UAE is 5%. It is charged on most goods and services like commercial sales, imports, and professional services unless they are zero-rated or exempted products.
There are three types of VAT rates in the UAE: Standard Rate (5%) for most taxable goods and services, Zero-Rated (0%) for exports, education, healthcare, and international transport, and Exempt (No VAT) for some financial services, residential property rentals, and local public transport.
Yes. The first sale of a residential property within three years of its completion is zero-rated, whereas subsequent sales or rentals are VAT-exempt.
Yes. VAT is levied on digital services, such as software downloads, streaming subscriptions, and online courses. UAE-based and overseas suppliers are required to comply with UAE VAT regulations if supplying services to UAE residents.
A company will examine the FTA guidelines and nature of the transaction. If a supply is zero-rated (i.e., exports, primary education), it may charge 0% VAT and claim input VAT. If the supply is exempt (i.e., rent of residential premises, life insurance), no VAT is charged and input VAT cannot be claimed.