UAE VAT Guide for 2026: Rates, Registration & Compliance
The UAE's VAT rate is 5%. This guide covers the AED 375,000 registration threshold, the rules for imports and digital services, and filing with the FTA.
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Key Takeaways
The UAE applies a flat 5% VAT to most goods and services, including digital supplies, in effect since 2018. Exports and international transport are zero-rated, while residential property, bare land, local passenger transport, and certain financial services are exempt. SaaS and digital services supplied to UAE customers are taxable at 5%.
Taxability Snapshot
SaaS
Taxable
Digital Goods
Taxable
Sales Tax Rates
The UAE applies a flat 5% VAT to most goods and services, including digital supplies.[1] A 0% rate covers exports, international transport, and certain sectors, and some supplies such as residential property and local passenger transport are exempt.[1] The tax authority is the Federal Tax Authority (FTA), and VAT has applied since 2018.[1]
Rate | Applies to |
|---|---|
Standard 5% | Most goods, services, digital supplies |
Zero 0% | Exports, international transport, some sectors |
Exempt | Residential property, local passenger transport, some financial services |
Registration & nexus threshold
The UAE uses a VAT registration threshold rather than US-style economic nexus. Registration is mandatory once taxable supplies and imports exceed AED 375,000 over the past 12 months or the next 30 days, and voluntary from AED 187,500 [2]. A non-resident making taxable supplies in the UAE where no other party is liable to account for the VAT must register with no threshold [2]. Registration steps are in the How to Register section.
Filing frequency & deadlines
VAT returns are filed through EmaraTax, with payment due within 28 days of the end of each tax period — monthly or quarterly depending on turnover.[1] Mandatory B2B and B2G e-invoicing rolls out in phases: a voluntary pilot from July 2026, mandatory for large businesses (revenue ≥ AED 50M) from January 2027, and for remaining businesses from July 2027. B2C transactions are currently out of scope.[1]
Exemptions
Exports and international transport are zero-rated, and residential property, bare land, local passenger transport, and certain financial services are exempt.[1] SaaS and digital services supplied to UAE customers are taxable at 5%.[1]
The UAE does not use US-style resale certificates. A registered business recovers the input VAT it pays on goods for resale and other business purchases through its VAT return [1]. Food is taxed at the standard 5%; only specific categories, such as exports and certain healthcare and education, are zero-rated, and a few, such as certain financial services and residential property, are exempt [1].
Penalties
Late registration carries a fixed AED 10,000 penalty. Late filing is AED 1,000 for the first offense and AED 2,000 if repeated within 24 months.[2] Late payment accrues at 14% per annum (non-compounding), calculated monthly on the outstanding VAT from the day after the due date until it is paid, under Cabinet Decision No. 129 of 2025 (effective 14 April 2026).[1]
The Federal Tax Authority audits VAT. To dispute a decision, a business first requests a reconsideration, then escalates to the Tax Disputes Resolution Committee and, if needed, the courts [5].
Sources
[1] Government of the UAE — Value Added Tax (5%, zero-rated and exempt categories)
[2] UAE Federal Tax Authority — VAT registration (AED 375,000 and AED 187,500 thresholds)
[3] UAE Federal Tax Authority — VAT registration service (EmaraTax, TRN)
[4] UAE Federal Tax Authority — Filing VAT returns and making payments
Verified July 2026 against the UAE Federal Tax Authority and Government of the UAE guidance.
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