VAT and Accounting in the UAE: Rates, Thresholds, and Duties
The United Arab Emirates charges 5% VAT, in force since 1 January 2018. Registration with the Federal Tax Authority (FTA) is mandatory at AED 375,000 of annual taxable turnover and voluntary from AED 187,500. Since June 2023 companies also file corporate tax at 9% on profit above AED 375,000, which made real bookkeeping unavoidable for UAE businesses of every size.
UAE VAT Rules at a Glance (2026)
UAE VAT in 2026 runs on six standing rules: a 5% standard rate, an AED 375,000 mandatory registration threshold, an AED 187,500 voluntary threshold, quarterly filing for most registrants, defined zero-rated categories, and a five-year record-retention duty; the table lists each rule with its value.
| Rule | Value |
|---|---|
| Standard VAT rate | 5% |
| Mandatory registration threshold | AED 375,000 taxable turnover per 12 months |
| Voluntary registration threshold | AED 187,500 |
| Filing frequency | Quarterly for most registrants; monthly for larger businesses, as assigned by the FTA |
| Zero-rated categories | Exports outside the GCC, international transport, first supply of new residential property, certain education and healthcare |
| Record retention | Accounting records kept for at least 5 years (longer for real estate) |
VAT Registration Checker
The checker applies the two FTA thresholds (AED 375,000 mandatory, AED 187,500 voluntary) to your trailing-12-month figures and states which registration path applies. Turnover means taxable supplies plus imports; the voluntary test also accepts taxable expenses.
VAT Penalties in Force (2026)
UAE VAT penalties in force since April 2026 under Cabinet Decision No. 129 of 2025 run from AED 1,000 for a first late return to AED 10,000 for late registration, plus 14% per year on unpaid tax; the table prices each breach.
| Breach | Penalty |
|---|---|
| Late VAT registration | AED 10,000 |
| Late return filing, first offense | AED 1,000 |
| Late return filing, repeated within 24 months | AED 2,000 |
| Late payment | 14% per annum on the unpaid tax, accrued monthly |
| Late e-invoice transmission (once mandated) | AED 100 per invoice, capped at AED 5,000 per month |
Filing and payment penalties per Cabinet Decision No. 129 of 2025 (effective April 2026) and e-invoicing penalties per Cabinet Decision No. 106 of 2025, as summarized by QAS Pro Global and CorporateTaxUAE.
E-Invoicing Is Arriving: The UAE Timeline
The UAE e-invoicing system opens on a voluntary/pilot basis from 1 July 2026 and becomes mandatory from 1 January 2027 for businesses with revenue of AED 50 million or more, with accredited service providers required by 30 October 2026 and phased adoption after that. Businesses choosing accounting software in 2026 should confirm the vendor's e-invoicing (PINT-AE) roadmap now rather than migrate twice.
What VAT Accounting Services in Dubai Actually Cover
A VAT accounting engagement in Dubai covers FTA registration, quarterly return preparation and filing, input-VAT reconciliation, and representation during FTA clarifications. Monthly bookkeeping retainers for a small Dubai company commonly run in the low four figures AED, scaling with transaction volume; one-off VAT registration is often bundled free with a bookkeeping contract. When comparing providers, confirm three things: FTA tax-agency accreditation, who signs the returns, and whether corporate-tax filing is included or billed separately.
Corporate Tax Changed the Baseline in 2023
UAE corporate tax at 9% on taxable profit above AED 375,000 applies to financial years starting on or after 1 June 2023, and every taxable person must register and file even at 0%. Small Business Relief lets a resident business with revenue at or below AED 3 million elect zero taxable income; Ministerial Decision No. 131 of 2026 extended this relief to tax periods ending on or before 31 December 2029. Free zone companies keep 0% only on qualifying income under the QFZP rules. Full details and sources are on the UAE corporate tax page.
Bookkeeping Duties Every UAE Company Has in 2026
Five bookkeeping duties bind every UAE company in 2026 regardless of size, from five-year record retention to arm's-length pricing on related-party transactions.
- Maintain accounting records sufficient to support VAT and corporate tax filings for at least 5 years.
- Register for corporate tax with the FTA regardless of profit level; late registration carries an AED 10,000 penalty.
- File VAT returns by the 28th day after each tax period once registered.
- Issue tax invoices that show TRN, VAT amount, and the FTA-required fields.
- Apply the arm's-length principle to related-party transactions under corporate tax transfer-pricing rules.
Thresholds and dates per Federal Decree-Law No. 8 of 2017 (VAT) and Federal Decree-Law No. 47 of 2022 (corporate tax); Small Business Relief extension per The National, 7 August 2026.
UAE VAT FAQ
When must a UAE business register for VAT?
A UAE business must register for VAT once taxable supplies and imports exceed AED 375,000 over the previous 12 months, or when they are expected to exceed that threshold within the next 30 days. Voluntary registration opens at AED 187,500 of supplies or expenses. Late registration carries a fixed AED 10,000 penalty.
What is the penalty for filing a UAE VAT return late?
Filing a UAE VAT return late costs AED 1,000 for the first offense and AED 2,000 for a repeat within 24 months, under Cabinet Decision No. 129 of 2025, in force since April 2026. Late payment of the tax itself accrues at 14% per year on the unpaid amount.