VAT Implementation in UAE

Stay compliant and grow your business with my VAT implementation services in the UAE.


Started on January 1st, 2018, the UAE introduced VAT, with Saudi Arabia and UAE being the first two GCC member countries to implement it. Other member countries, including Bahrain, Oman, Qatar, and Kuwait, followed in the middle of 2018. A 5% standard rate is applied to the supply of goods and services in the UAE, with certain exceptions such as local passenger transportation, specified financial services, healthcare, and exports outside of the GCC, which either zero-rated or exempted from VAT. This move generated revenue for the country, help it to reduce its dependence on oil revenue and support economic diversification.

The conditions and controls for exempting supplies mentioned in the UAE VAT law will become clearer only after the release of the ‘Executive Regulations’ for VAT. This means that businesses will have to wait for further guidance before they can properly understand the exemptions, they may be eligible for under the law. The ‘Executive Regulations’ will provide a detailed outline of the necessary steps businesses need to take to ensure compliance with the UAE VAT law. Once these regulations are released, businesses can expect to gain a clearer picture of how the VAT exemption process works and what they need to do to take advantage of it.

Business Readiness for Value Added Tax in UAE

The year 2018 marked the implementation of VAT in the UAE. As the deadline approaches, it is crucial for businesses to prepare for the new taxation system and become ‘VAT Ready’. Being ‘VAT Ready’ means more than just preparing for early 2018 – it means being prepared now for the upcoming changes. One of the first steps towards readiness is to ensure that all financial transactions are accurately recorded and books of accounts are up to date. This will serve as evidence for the minimum annual turnover threshold limit for registration. Additionally, being ‘VAT Ready’ means that businesses must charge VAT on taxable goods and services, keep track of VAT paid on purchases to claim input tax deductions, and file online VAT returns regularly to disclose details of VAT charged and paid. By following these steps, businesses can ensure their compliance with the new VAT registration and regulations in the UAE.

In preparation for the implementation of VAT in your country, it is crucial to take immediate action. The first step is to find the best VAT software that can help your business achieve compliance with ease. Additionally, it is essential to have a solid understanding of the fundamentals of VAT and its impact on your business. This will require making changes to your business operations, financial management, bookkeeping services, and more, in order to fully comply with the new requirements. In terms of VAT readiness, there are several key tasks to consider. These include exploring the best VAT software and aligning it with your business activities, educating your teams on VAT fundamentals, reviewing your business processes, practices, and procedures, ensuring accurate books of accounts, informing vendors and customers about VAT, and preparing for a seamless transition into the new era of VAT. With these steps, your business will be fully prepared and ready to succeed in the new VAT landscape.


Frequently asked questions.

All businesses with an annual turnover of AED 375,000 or more are required to register for VAT, while those with an annual turnover of AED 187,500 or more can voluntarily register.

VAT implementation can help businesses increase their competitiveness, improve their financial management, and enhance their reputation as a reliable and compliant organization.

Failure to comply with VAT regulations in the UAE can result in penalties, fines, and legal action, which can be costly for businesses. It's important to seek expert guidance and support to avoid these consequences.

VAT implementation can have a significant impact on your business processes and financial management, including changes to invoicing, record-keeping, and tax reporting. It's important to work with experienced VAT consultants to ensure a smooth transition and ongoing compliance.

Ongoing VAT compliance in the UAE requires regular monitoring of your business transactions, record-keeping, and tax reporting. Working with a reliable and experienced VAT consultant can help you stay up to date with the latest regulations and avoid penalties and fines.

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