How to Pay VAT in the UAE: A Detailed Guide to the VAT Payment Process

The United Arab Emirates (UAE) implemented Value Added Tax (VAT) on January 1, 2018, as part of its efforts to diversify its revenue sources. VAT is charged at a rate of 5% on the supply of goods and services, with businesses registered for VAT being responsible for collecting the tax and remitting it to the Federal Tax Authority (FTA). This guide provides a detailed breakdown of how VAT payments can be made in the UAE and the different methods available to businesses to fulfil their VAT obligations.

Why Do You Need to Pay VAT?

VAT-registered businesses must file VAT returns either on a monthly or quarterly basis, depending on their turnover. If your output tax (the VAT charged on sales) exceeds your input tax (the VAT paid on purchases), you will be required to pay the difference to the FTA. 

This is done through the FTA’s online portal, EmaraTax, which provides an efficient system for filing VAT returns and making payments.

How to Make VAT Payments in the UAE: 5 Methods

There are several ways to pay VAT in the UAE. These methods are designed to provide businesses with flexibility and ease of use. The available payment options are:

1. Credit Card Payment through FAB Magnati Gateway
2. Local Bank Transfer via GIBAN
3. International Bank Transfer via GIBAN
4. eDebit Payment
5. e-Dirham Card Payment

Credit Card Payment Using FAB Magnati Gateway

One of the most convenient methods for paying VAT is through the FAB Magnati gateway. This method allows businesses to make payments using their credit card directly on the FTA’s website.

Steps to Make Credit Card Payments:

1. Log in to the FTA eServices account using your registered credentials.
2. Go to the “My Payments” tab to view the amount due.
3. Enter the payment amount you wish to pay towards VAT.
4. Click "Make Payment" and you will be redirected to the payment information screen.
5. Proceed to FAB Magnati Gateway, click "Pay Now" and select your payment method (Visa or MasterCard).
6. Enter your card details
7. Verify payment with OTP
8. Payment confirmation 

Important Notes:

• A processing fee of 0.68% will be charged on the total payment amount when using the FAB Magnati gateway.
• If your payment fails, you may need to wait between 30 to 150 minutes before attempting another transaction.
• Transaction history can be viewed under the "My Payments" tab.

Local Bank Transfer via GIBAN

Another popular method of paying VAT is through a local bank transfer using a unique IBAN number known as GIBAN, which is assigned to every taxable business by the FTA. This method is ideal for businesses that prefer to use their UAE-based bank account.

Steps to Make Local Bank Transfers:

1. Log in to the FTA eServices account 
2. Retrieve your VAT GIBAN from the dashboard.
3. Add the FTA as a beneficiary – Using your banking portal
4. Go to the fund transfer section, enter the VAT payment amount
5. Confirm the payment

Important Notes:

• Payments must be made at least 24 hours before the due date to avoid penalties.
• Using the wrong GIBAN could lead to delays, and you would need to contact the FTA via email (payment.transfer@tax.gov.ae) to rectify the error.

International Bank Transfer via GIBAN

If your bank is based outside the UAE, you can make VAT payments using the GIBAN through an international transfer. This method is suitable for businesses that hold bank accounts in foreign countries, provided their bank is part of the SWIFT network.

Steps to Make International Bank Transfers:

1. Log in to the FTA eServices account
2. Retrieve your VAT GIBAN.
3. Visit your bank branch – Provide the following information to the teller:
4. Complete the transfer 
5. Verify the payment 

Important Notes:

• International transfers can take several days, so it's recommended to make the payment at least a week before the due date to avoid penalties.

eDebit Payment

eDebit allows businesses to make VAT payments directly from their UAE bank account using internet banking credentials. This option requires no manual transfer but instead processes payments directly to the FTA’s bank account.

Steps to Make eDebit Payments:

1. Log in to the FTA eServices portal 
2. Go to the "My Payments" tab.
3. Enter the tax amount and click "Make Payment."
4. Select eDebit payment method on the payment gateway page
5. Select your bank 
6. Confirm the transaction.

Supported Banks:

• Citibank (Retail)
• Commercial Bank of Dubai (Corporate and Retail)
• Emirates NBD (Corporate and Retail)
• First Abu Dhabi Bank (Corporate and Retail)
• Dubai Islamic Bank (Retail)
• Noor Bank (Retail)
• Standard Chartered (Corporate and Retail)

Important Notes:

• eDebit payments charge a transaction fee of AED 10.
• Payment status may show as "Pending" for up to 30 minutes before it updates to “Completed.”

5. e-Dirham Card Payment

The e-Dirham card is another method of paying VAT, specifically designed for government transactions. Payments using e-Dirham incur a nominal fee.

Steps to Make e-Dirham Payments:

1. Log in to the FTA portal 
2. Go to "My Payments" 
3. Enter the amount to be paid.
4. Select e-Dirham as the payment method
5. You will be redirected to the payment gateway.
6. Confirm the transaction 

Important Notes:

• The fee for e-Dirham transactions is AED 3.

VAT Payment Allocation Options

When making a VAT payment, businesses can choose how their payment is allocated:

1. Tax Liability Cleared First (Default): Older tax liabilities are prioritized before newer ones.
2. Administrative Penalties Cleared First: Penalties are cleared before any outstanding tax liabilities.
3. Oldest Liability Cleared First: Payments are applied in chronological order, regardless of whether they cover tax or penalties.

You can choose or update your payment allocation preferences via the "My Payments" tab in the FTA’s eServices portal.

Which Method is the Best for VAT Payment in UAE?

Here is a comparison table of all methods to choose from

VAT Payment Due Dates

For Quarterly VAT Filers

If your business submits VAT returns on a quarterly basis, the payment deadlines are as follows:

For Monthly VAT Filers

If your business files VAT returns monthly, payment is due 28 days after the end of each month. For instance, VAT for the month of June must be paid by the 28th of July.

Best Practices for Paying VAT

To avoid penalties and ensure timely VAT payments, follow these best practices:

• Pay on Time: Always make payments well before the due date to avoid penalties. For international transfers, aim to pay at least a week in advance.
• Verify Transactions: After making a payment, always check the “My Payments” tab to ensure the transaction has been recorded.
• Use the Correct GIBAN: Ensure that the correct GIBAN is used for all VAT payments to prevent any issues or delays.
• Check for Outstanding Liabilities: Before making payments, check if there are any outstanding liabilities or penalties to avoid further complications.

Conclusion

Paying VAT in the UAE is a straightforward process with multiple payment options available to suit the needs of businesses. By understanding the steps involved and following best practices, you can ensure that your VAT payments are made accurately and on time. Whether you prefer to pay via credit card, bank transfer, or eDebit, the FTA’s EmaraTax platform provides a convenient and user-friendly way to manage your tax obligations.