VAT Rate List in UAE

The Federal Tax Authority (FTA) of the United Arab Emirates (UAE) introduced the Value Added Tax (VAT) w.e.f 1st January 2018. It issued Federal Decree-Law No. 8 of 2017 to implement VAT in UAE.

Further, VAT law specifies the types of supplies and respective VAT rates to be charged on the supply of goods and services.

It announced that the supply of goods and services attracts 5% VAT. However, the VAT law categorised a few goods and services under zero-rated and exempt supplies where no tax is charged.

This article explains the types of VAT rates in the UAE with examples.

What is the VAT rate in UAE?

The businesses registered under UAE VAT shall levy VAT @ 5%. Further, they should collect and remit it to the government. 

The FTA categorised a few supplies under the standard rate in UAE that attract a 5% VAT rate and certain types of supplies as exempt and zero rated.

UAE VAT rate list

Below is the VAT rate structure to charge on the supply of goods and services.

Standard-rated supplies: 5% VAT

A standard rate of 5% VAT will be levied on all taxable supplies of goods or services in UAE, including imports. Taxpayers need to identify the taxable supplies on which a VAT rate of 5% is to be levied.

Broadly speaking, whatever supplies are not specified under zero-rated and exempt supplies can be considered standard-rated supplies. Below are a few examples of standard-rated supplies:

• Retail sales
• Construction supplies
• Restaurant and hotel services
• Leisure and entertainment services

Zero-rated supplies:  0% VAT

Even though no VAT is collected on zero-rated supplies still, you must charge VAT @ 0% in the invoice. Also, in the case of zero-rated supplies, the supplier can recover the input VAT incurred on purchases for making zero-rated supplies.

Here’re a few zero-rated supplies mentioned in the UAE VAT law:

• Export of goods and services
• International transportation services
• Precious metals
• Residential buildings
• Buildings used for charities
• Educational services
• Healthcare services
• Crude oil and natural gas

It is to be noted that taxpayers shall meet the criteria specified in the UAE VAT Law to levy the zero rate on the above supplies.

Exempt supplies: Nil VAT

It is to be noted that exempt and zero-rated supplies are different. In the case of exempt supplies, suppliers can not charge VAT to customers and recover input VAT on costs incurred in making exempt supplies. Whereas in the case of zero-rated supplies 

UAE VAT law specified four categories of exempt supplies as follows:

• Specified financial services
• Residential Buildings (which do not fall under zero-rated)
• Bare land
• Local passenger transport

Please note that the taxpayers shall meet the criteria mentioned in the VAT law to claim the benefit of exempted supplies.