How does VAT vary for different businesses in the UAE?  

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In the UAE VAT is broadly classified as taxable supplies in businesses, which include both zero-rate supplies and exempt supplies. Taxable supplies are levied a standard rate of VAT at 5% whereas on zero-rated and exempt supplies, no tax is levied. However, the VAT treatments for zero-rated and exempt supplies are quite different.  

The applicability and treatments of VAT on business supplies vary from each other. There are several factors such as locale of supply, the supplier area, and location of recipient etc. which are critical to the applicability of VAT. On this basis, we have classified businesses into different categories and have enlisted their detailed applicability of VAT.

For Domestic Taxable Business Supplies

A VAT registered business should charge VAT on local supplies of goods and services within the UAE. VAT collected from the customer is termed output tax and it must be accounted for in the VAT return.   

The Taxability is fixed at Standard Rate of VAT at 5% 

For Reverse Charge Business Supplies

Businesses registered in the UAE are accountable to pay VAT on notified supplies like imports from overseas / and other VAT implementing GCC States on Reverse Charge basis. In the same tax period, they can reclaim the VAT as an input tax so that no extra tax is further payable / reclaimable for the transaction. 

The Taxability is fixed at Standard Rate of VAT at 5% 

For Zero-rated Business Supplies

A VAT registered business can charge VAT at zero-rate (i.e. charge VAT at 0%) on the supply of exports of goods and services, international transportation etc.

The Taxability is fixed at Standard Rate of  0% VAT applicable. 

Exempt Businesses and Services


Financial services, residential buildings, bare land, local passenger transport etc. are exempted from VAT. 

The Taxability is deemed as NA/Non Applicable 

Intra-GCC Supplies – B2B

A business registered in the UAE is not charged VAT on the supply of goods and services to the recipients who are registered under other GCC implementing states. The reason being the locale of supply in the above cases is considered to be in another GCC implementing state. 

Intra-GCC Supplies – B2C Â

For a business registered in the UAE, supplying goods or services to a recipient who is not registered in another GCC implementing state, VAT at 5% will be levied. However, it is deemed applicable only if all the exports made by the business from the UAE to that specific implementing state are not exceeding the mandatory registration threshold limit of that state.

The Taxability is deemed at a Standard Rate of VAT at 5% (in this case)


For a supplier business registered in the UAE, that is supplying to a recipient who is not registered in another GCC implementing state and the total value of all the exports made by the supplier from UAE to that implementing state exceeds the mandatory registration threshold of that implementing state, VAT will not be applicable.   The analogy being, the place of supply is considered to be outside the State tax jurisdictions of UAE. In this case, the Supplier (from UAE) has to register in KSA (Saudi Arabia) and charge VAT according to KSA VAT Law. 

The Taxability is deemed NA (Non applicable) (in this case) 

VAT for Businesses


When preparing for VAT implementation and its implications to businesses. The subject of Indirect Taxation is still fairly new although it existed in certain business-specific scenarios. No doubt, in several ways all businesses will be impacted. The simple reason being,  ‘VAT’ being a transaction-based tax, which requires you to ensure that every recorded transaction is VAT compliant. To ensure compliance, it is imperative for businesses to understand what VAT is and how VAT works. Here we thoroughly discussed common VAT applicability scenarios.

Need Some Expert Help !

Reach out to us at 

Financial Cube – we have been guiding VAT registration in the UAE since its inception.  

We are a responsibly competent finance based network offering accounting and taxation solutions, based in the UAE.   

Offering a wide service portfolio in filing taxations, auditing, accounting and bookkeeping.  Financial cube is your truly wholesome financial service provider offering high level VAT filing services across UAE along with tailored Corporate Tax solutions in Dubai for all your business and accounting needs in the Gulf region. 


If you are interested in our services, please contact us.


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