UAE VAT Guide: 5% Rate, Registration Threshold, FTA Filing 2026

Q: What is the UAE VAT rate in 2026?

The standard VAT rate is 5%. No announced plans to increase it. The rate applies uniformly across all seven emirates.

Q: Is there VAT on property purchases in Dubai?

Residential sales are VAT-exempt (after first supply). Commercial property is 5% VAT. New residential sold within 3 years may be zero-rated.

The UAE introduced Value Added Tax (VAT) at 5% on 1 January 2018. It applies to most goods and services with some zero-rated and exempt categories. The registration threshold is AED 375,000 in annual taxable supplies. Voluntary registration is available from AED 187,500. Businesses file returns quarterly with the Federal Tax Authority (FTA). Here is how VAT works in the UAE for 2026.

VAT is the UAE's primary indirect tax, administered by the Federal Tax Authority (FTA). The standard rate of 5% is among the lowest VAT rates globally (compare with EU standard rates of 17-27%, Saudi Arabia 15%, and Australia's GST at 10%). VAT is a consumption tax charged at each stage of the supply chain, with businesses able to recover input VAT on their purchases. The final consumer bears the cost. VAT applies in all seven emirates equally under Federal Decree-Law No. 8 of 2017. Compare VAT with UAE Corporate Tax 9% →

Standard Rate (5%)

The 5% VAT rate applies to most goods and services including retail, hospitality, transportation (domestic), professional services, financial services (with some exceptions), real estate (commercial property), telecommunications, and entertainment. The UAE deliberately kept VAT at 5% — significantly lower than the GCC's permitted maximum of 5% at the time (Saudi Arabia later raised its rate to 15% in 2020). Key items at 5% VAT include: restaurant meals, hotel accommodation (plus tourism fees), electronics, clothing, furniture, vehicle purchases, professional fees, and domestic flights.

Zero-Rated Supplies (0%)

Certain supplies are subject to 0% VAT. Businesses can still recover input VAT on related costs. Zero-rated categories include:

Exports: Goods and services exported outside the GCC are zero-rated
International transport: Passenger and freight transport between the UAE and other countries
Certain means of transport: Aircraft, ships, and trains used for international transport
Specific medical goods: Medicines, medical equipment, and investment gold
New residential property: First supply of residential property within 3 years of completion
Education services: Certain preschool, school, and higher education (some may be exempt)
Healthcare services: Certain healthcare services (may be exempt depending on the provider)

Exempt Supplies

Exempt supplies are not subject to VAT, but the supplier cannot recover input VAT on related costs. Key exempt categories include:

Residential property: Sale or lease of residential property (after the first supply within 3 years)
Bare land: Sale of undeveloped land
Life insurance: Life insurance and re-insurance
Financial services: Certain financial services (margin-based, fee-based services may be taxable)
Local passenger transport: Public transport (buses, metro, taxis)

The distinction between zero-rated and exempt is important: zero-rated suppliers can reclaim input VAT, while exempt suppliers cannot. This makes the zero-rated category much more favorable for businesses.

Registration Threshold: AED 375,000

Mandatory VAT registration applies when a business's taxable supplies and imports exceed AED 375,000 over the previous 12 months or are expected to exceed this threshold in the next 30 days. Voluntary registration is available from AED 187,500. The threshold is calculated on total taxable supplies (standard-rated + zero-rated supplies, excluding exempt supplies). Non-resident businesses making taxable supplies in the UAE must register regardless of the threshold. Businesses may also register as a VAT group with related parties.

FTA E-Filing Requirements

VAT returns must be filed quarterly through the FTA's EmaraTax digital platform (launched in 2023, replacing the earlier e-Services portal). Returns are due within 28 days after the end of each tax period. Standard tax periods are quarterly, though the FTA may assign monthly or six-monthly periods in specific cases. Late filing penalties: AED 1,000 for the first late return, AED 2,000 for subsequent late returns. Late payment penalties: 2% immediately on unpaid tax, plus 4% after 7 days, plus 1% per day thereafter up to a maximum of 300%. Businesses must maintain VAT records for at least 5 years.

What is the UAE VAT rate in 2026?

The standard VAT rate is 5%. There are no announced plans to increase this rate, though periodic reviews occur. The 5% rate applies uniformly across all seven emirates.

Is there VAT on property purchases in Dubai?

Residential property sales (after first supply) are VAT-exempt. Commercial property sales are subject to 5% VAT. Newly constructed residential property sold within 3 years of completion may be zero-rated. The 4% Dubai Land Department transfer fee is separate from VAT.

Can I claim back VAT on business expenses?

Yes, VAT-registered businesses can recover input VAT on business expenses, subject to certain restrictions. Input VAT on entertainment, passenger vehicles (if not used 100% for business), and other non-business expenses may have limited recovery.

What are the VAT penalties in the UAE?

Penalties include AED 1,000 for first late return, AED 2,000 for subsequent late returns, and late payment penalties starting at 2% of unpaid tax. False records or evasion can result in penalties up to AED 50,000 or more.