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VAT Rate

What are the rates under UAE VAT?

Businesses that are registered under UAE VAT are responsible to levy VAT @ 5%, collect it and submit it to the government. On most of the supplies in UAE, VAT rate is levied at a 5% tax rate, a few specified goods or services and a certain type of supplies are classified as exempt supplies and zero rate supplies. Thus, broadly the tax structure for the purpose of levy can be classified as below:

UAE VAT Tax Rates and Types.
Tax Type Tax Rate
Standard 5%
Zero – rated Supplies 0%
Exempt Supplies Nil
How to determine whether a supply is a taxable supply?

'Taxable supply' refers to all types of supply of Goods or Services for a consideration made by a taxable person conducting business in the State including zero rate supplies but does not include exempt supplies. Though zero-rated supplies are included as taxable supplies, the levy of tax will be at zero percent.

Thus, except zero-rated supplies and exempt supplies, on all other supplies, VAT rate of 5% should be levied.

For you to determine whether 5% VAT should be levied on your supplies, all you need to do is:

  • Determine whether any of your supplies are under zero-rated or exempt supplies list.
  • If none of your supplies are under zero-rated list and exempt list, it is understood that all your supplies are taxable supplies and you need to charge VAT at 5%.
  • If few of your supplies are under zero-rated list or exempt list, except those, all others will be taxable supplies and you need to charge VAT at 5%.

The executive regulations will provide the details of supplies which are zero-rated and goods or services which are exempted. Generally, all exports are zero-rated, however, subject to fulfillment of conditions. Supplies like notified financial services, residential building, local transportation etc. are few examples of exempt supplies.

It is very crucial for businesses to determine the taxable supplies on which VAT rate of 5% is to be levied.

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