Value Added Tax in UAE
Value Added Tax is charged at the flat rate of 5% in the United Arab Emirates on the sale of goods and/or services. However, there are some goods/services, known as exempt supplies, which are exempt from the levy of Value Added Tax. There is also another category of goods/services, known as zero-rated supplies, on which VAT has to be levied, but at the rate of 0%. There is no Value Added Tax payable on the sale of zero-rated supplies, but accounting requirements stipulate that they be recorded correctly.
For companies that have an annual turnover of AED 150 million or more, the Standard Tax Period is usually of one month duration. The outstanding VAT amount payable must be paid within 28 days of the end date of the Standard Tax Period and the VAT return filed accordingly. Submitting an incorrect VAT return entails a penalty of AED 3,000 for the first offence and AED 5,000 for every subsequent offence, so it is best to have an experienced VAT specialist file your tax returns.