What is the VAT rate in the UAE?
The standard VAT rate in the UAE is 5%. Some supplies are zero-rated at 0%, and others are exempt from VAT, depending on the category defined in the VAT law and FTA guidance.
VAT Rate & Basics
VAT Rate in the UAE: What Is VAT?
VAT (Value Added Tax) is a consumption tax applied in the UAE since 1 January 2018. The standard VAT rate is 5%, with certain supplies zero-rated (0%) or exempt depending on the category.
- Understand the 5% standard rate
- Know standard vs zero-rated vs exempt
- See clear UAE examples
Dubai-based, FTA-aware VAT support for UAE businesses.
Quick Answer
The standard VAT rate in the UAE is 5%. VAT is an indirect tax charged on most goods and services at each stage of the supply chain, with the final cost borne by the consumer. Some supplies are zero-rated (taxed at 0%, such as certain exports and specified sectors), and others are exempt (no VAT, such as certain financial services and residential property in defined cases). Businesses charge VAT on sales and recover VAT on eligible purchases.
5%Standard UAE VAT rate
0%Zero-rated supplies
ExemptNo VAT on certain supplies
2018VAT introduced in the UAE
What Is VAT and How Does It Work?
VAT is an indirect, consumption-based tax. A VAT-registered business charges 5% output VAT on its taxable sales and pays input VAT on its purchases. When filing, it pays the FTA the difference between the VAT it collected and the VAT it paid — so the tax is effectively borne by the end consumer, not the business. This is why accurate invoices and records matter: they prove how much input VAT you can legitimately recover.
- Output VAT: charged on your sales (5%)
- Input VAT: paid on eligible purchases
- Net VAT: the difference paid to the FTA
Standard, Zero-Rated and Exempt Supplies
Not everything is taxed at 5%. Standard-rated supplies carry the 5% rate — most goods and services fall here. Zero-rated supplies are taxable but at 0%, which means the business can still recover related input VAT; examples include certain exports outside the GCC and specified sectors. Exempt supplies carry no VAT and generally do not allow input VAT recovery; examples include certain financial services and some residential property supplies. Correct classification is essential, because it changes both what you charge and what you can reclaim.
- Standard-rated (5%): most goods and services
- Zero-rated (0%): certain exports and specified categories
- Exempt: certain financial services and residential property
Why Correct VAT Classification Matters
Applying the wrong VAT treatment is a common and costly error. Charge VAT where it should be zero-rated and you overcharge customers; treat a standard supply as exempt and you under-declare tax to the FTA. Either can lead to corrections, penalties or lost input VAT recovery. Exiloz helps classify your supplies correctly from the start and keeps the treatment consistent across invoices, ledgers and returns.
- 1Map each supply to the correct VAT treatment
- 2Apply the right rate on invoices
- 3Recover input VAT only where allowed
- 4Keep classification consistent in returns
UAE VAT Rate FAQs
What is VAT?
VAT (Value Added Tax) is an indirect consumption tax charged on most goods and services. VAT-registered businesses charge it on sales, recover it on eligible purchases, and pay the net amount to the FTA.
When was VAT introduced in the UAE?
VAT was introduced in the UAE on 1 January 2018 at a standard rate of 5%, under Federal Decree-Law No. 8 of 2017.
What is the difference between zero-rated and exempt?
Zero-rated supplies are taxable at 0% and still allow related input VAT recovery. Exempt supplies carry no VAT and generally do not allow input VAT recovery. The distinction affects what you can reclaim.
Do all businesses charge 5% VAT?
Only VAT-registered businesses charge VAT, and only on standard-rated supplies. Zero-rated supplies are charged at 0%, and exempt supplies carry no VAT at all.
Can Exiloz help classify my supplies?
Yes. Exiloz helps determine the correct VAT treatment for your goods and services and keeps it consistent across your invoices, records and VAT returns.
Need help applying the right VAT rate?
Exiloz helps UAE businesses classify supplies correctly, apply the 5% rate where it belongs, and keep VAT treatment consistent across invoices and returns.
