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VAT in UAE introduced in line with the GCC common VAT agreement.

UAE introduced VAT with multiple tax slabs i.e. Standard rated (VAT 5%), Zero rated (VAT 0%) & Exempted. 

1. Zero rated - International transportation of passengers & goods, Exports of goods or services, Supply of means of transportation, first supply of residential building, supply of crude oil & natural gas, supply of educational service & related goods/services, supply of preventive & basic health care services etc.

2. Exempt - Financial services, supply of residential building (other than zero rated), financial services, supply of bare land and local passenger transportation service etc.

3. Standard rate - Any thing not covered under zero rate or exempt shall be taxable at standard rate

The Federal Tax Authority (FTA) is the designated authority for administration of taxes in UAE. After introduction of VAT in UAE, there has been numbers of clarifications, guides and decisions issued to clarify the tax positions/interpretations as per the VAT law/regulation 

The threshold limits for VAT registration are:

- Mandatory registration – Annual Taxable turnover more than AED 375,000. 

- Voluntary registration – Annual Taxable turnover/expenses between AED 187,500 and AED  375,000.