Tax guides · VAT
UAE VAT guide
UAE VAT is charged at 5% on most supplies, with some supplies zero-rated and some exempt. Most VAT problems come from how transactions are classified and documented, not from the arithmetic. This guide covers the points that matter most in practice.
What are the UAE VAT rate, return deadline and penalties?
| Item | Figure | Source |
|---|---|---|
| Standard rate | 5% | Federal Decree-Law No. 8 of 2017 on VAT |
| Return deadline | 28 days after the end of the tax period | Federal Decree-Law No. 8 of 2017 on VAT |
| Late payment of VAT | 14% a year on the unpaid tax, charged monthly | Cabinet Decision No. 40 of 2017, as amended by Cabinet Decision No. 129 of 2025 (from 14 April 2026) |
| Late VAT return | AED 1,000; AED 2,000 if repeated within 24 months | Cabinet Decision No. 40 of 2017, as amended (from 14 April 2026) |
| Error corrected by voluntary disclosure | 1% of the tax difference for each month or part of a month | Cabinet Decision No. 40 of 2017, as amended (from 14 April 2026) |
Which VAT issues cause most errors?
Which supplies are zero-rated or exempt?
Exports of goods and services, international transport and certain education, healthcare and residential property supplies can be zero-rated if the conditions and evidence are in place. Some financial services, bare land and local passenger transport are exempt. The difference matters because input VAT on exempt supplies cannot be recovered.
When can we recover input VAT?
When the purchase is for making taxable supplies, you hold a valid tax invoice, and the expense is not blocked. Entertainment, some staff benefits and motor vehicles available for private use are the usual blocked items.
What causes most VAT penalties?
Late returns and payments, wrong tax codes in the accounting system, missing evidence for zero-rating, and errors found after filing that were not corrected through a voluntary disclosure.
What changed in April 2026?
From 14 April 2026, Cabinet Decision No. 129 of 2025 changed VAT and excise penalties: late payment is 14% a year, applied monthly; a late return is AED 1,000 (AED 2,000 if repeated within 24 months); a voluntary disclosure costs 1% of the tax difference a month, plus a fixed 15% if made after an FTA audit notice.
Unsure your VAT set-up is right?
A VAT health check finds the errors in invoices, tax codes and returns before an audit does.
Last reviewed: 22 October 2026 · Reviewed by Muhammad Imran, ACMA
General information only, not legal or tax advice.
Valorin is an independent advisory firm, not affiliated with the FTA or MoF.