Federal Decree-Law No. 8 of 2017 · Module A
UAE VAT Quick
Reference Guide
General Principles · Registration · Supplies · Zero-Rating & Exemption
CH 1General Principles
CH 2VAT Registration
CH 3What is a Supply?
CH 4Supply Liability
CH 5Zero-Rating
CH 6Exempt Supplies
CH 7Deemed Supplies
CH 8Value of Supply
Federal Decree-Law No. 8 of 2017
VAT Law — Primary legislation, definitions & general principles
Cabinet Decision No. 52 of 2017
Executive Regulation — Detailed rules & limitations
Federal Decree-Law No. 28 of 2022
Law on Tax Procedures — effective 1 March 2023
Federal Decree-Law No. 13 of 2016
FTA Establishment Law — powers of the Authority
Standard Rate: 5% · Art. 3, VAT Law
Zero Rate: 0% · Art. 44, VAT Law
01
Chapter 1
General Principles
Scope · Time & Value of Supply · Output & Input Tax · Compliance
🔍 Scope of UAE VAT — 4 Conditions
| ✔ Taxable/deemed supply | Goods or services under VAT Law definition | Art. 2, VAT Law |
| ✔ Place of supply | Supply must take place in the UAE | Title 5 Ch.2, VAT Law |
| ✔ Taxable person | Registered or required to register for VAT | Art. 1, VAT Law |
| ✔ In course of business | Regular activity carried on for economic gain | Art. 1, VAT Law |
⚠ All 4 conditions must be met. If any one fails → Outside Scope of VAT.
⏱ Time of Supply (Tax Point)
| Goods | Earliest of: transfer date, possession date, assembly completion, customs date, or 12 months if returnable basis | Art. 25, VAT Law |
| Services | When services completed — or earlier if invoice/payment issued first | Art. 25, VAT Law |
| Periodic/Invoices | Earliest of: invoice date, due date on invoice, payment receipt, 1-year anniversary | Art. 26(1), VAT Law |
| Vending machines | Date funds collected from the machine | Art. 26(2), VAT Law |
| Deemed supplies | Date of supply, disposal, change of use, or deregistration | Art. 26(3), VAT Law |
💰 VAT Rates
| Standard Rate | 5% 5% | Art. 3, VAT Law |
| Zero Rate | 0% 0% | Art. 44, VAT Law |
| Exempt | No VAT charged; input tax not recoverable Exempt | Art. 46, VAT Law |
| Outside Scope | No VAT applies at all O/S | Art. 2, VAT Law |
📋 Output & Input Tax
| Output Tax | VAT charged on sales; also on gifts >AED 500 & private use | Art. 10, VAT Law |
| Input Tax | VAT on purchases for taxable supplies; requires valid tax invoice | Art. 54, VAT Law |
| Bad Debts | Write off if unpaid after 6 months; reclaim output tax | Art. 64, VAT Law |
| Value of Supply | Consideration received, exclusive of VAT | Title 5 Ch.4, VAT Law |
📅 Compliance Deadlines
| VAT Return due | 28 days after end of tax period | Art. 64, Regulation |
| Payment due | 28 days after end of tax period | Art. 64, Regulation |
| Tax Period | Generally 3 months (monthly / 6-monthly by agreement) | Art. 62, Regulation |
| Records | Min. 5 years; real estate: 15 years | Law on Tax Procedures |
| Appeals | Within 40 business days from notification; disputes >AED 100k go to court | Art. 28-29, LTP |
02
Chapter 2
VAT Registration
Mandatory · Voluntary · Non-Residents · VAT Groups · Deregistration
🔢 Registration Thresholds at a Glance
Mandatory (Residents)
AED 375,000
Art. 7(1), Regulation
Voluntary (Residents)
AED 187,500
Art. 17, VAT Law; Art. 8, Reg.
Non-Residents
No Threshold
Art. 18, VAT Law
Deregistration Limit
AED 187,500
Art. 21, VAT Law
📊 Historic & Future Tests (Art. 13, VAT Law)
| Historic Test | Applied at end of each calendar month. Look back 12 months. If taxable supplies exceed AED 375,000 → must apply to register within 30 days. Registration effective: 1st day of following month. | Art. 13, VAT Law; Art. 7, Reg. |
| Future Test | Daily test — look forward 30 days. If supplies in that window will exceed AED 375,000 → apply within 30 days. Registration effective: from the trigger date (or earlier agreed date). | Art. 13, VAT Law |
| Voluntary | Same historic & future tests apply. Effective from 1st day of month following application (or earlier agreed). Enables input VAT recovery before trading commences. | Art. 17, VAT Law; Art. 8, Reg. |
ℹ Exempt supplies and outside-scope supplies do not count toward the registration threshold. Capital assets are also excluded — Art. 20, VAT Law.
🏢 VAT Group Registration (Art. 14, VAT Law)
| Condition 1 | Each entity has UAE place of establishment or fixed establishment | |
| Condition 2 | Entities are "related parties" under the VAT Law | |
| Condition 3 | One or more persons control the others | |
| Representative | Responsible for all returns; all members jointly & severally liable for debts | Art. 11(2), Reg. |
| Intra-group supplies | Disregarded for VAT purposes | Art. 14, VAT Law |
| Amendment | Notify within 20 business days; effective from next tax period | Art. 6(2)(b), LTP |
⚠️ Special Rules
| Sole trader | Multiple trades = one registration only — VATP026 |
| Zero-rated only | May apply for exception from registration — Art. 15, VAT Law |
| Non-resident | Register within 30 days of first taxable supply; no threshold applies — Art. 18, VAT Law |
03
Chapter 3
What is a Supply?
Five Conditions · Goods vs. Services · Types of Supply
✅ Five Conditions for a Supply
| 1 | Consideration | Payment in money or kind received or expected to be received for the supply | Art. 1, VAT Law |
| 2 | Goods or Services | Goods = physical/intangible property transferred. Services = anything that is not a supply of goods | Art. 1, VAT Law |
| 3 | By a Taxable Person | Must be made by a person who is registered or required to register for VAT in the UAE | Art. 1, VAT Law |
| 4 | In the UAE | Place of supply rules determine where VAT applies — special rules for goods/services between UAE and Implementing States | Title 5 Ch.2, VAT Law; Title 4, Reg. |
| 5 | In Course of Business | Must be made in the course or furtherance of any business carried on by that person | Art. 1, VAT Law |
✅ Taxable Supplies 5% 0%
- Standard-rated at 5% — default for all UAE suppliesArt. 3, VAT Law
- Zero-rated at 0% — specific categories (exports, transport, etc.)Art. 44 & 45, VAT Law
- Counted in VAT registration threshold
- Input tax on related costs is fully recoverable
🚫 Exempt Supplies
- No VAT charged on the supplyArt. 46, VAT Law
- Input tax on related costs is NOT recoverable
- Not counted in VAT registration threshold
- Categories: financial services, residential property, bare land, local transport
⭕ Outside the Scope
- Does not meet one or more of the 5 conditions
- No VAT applies at all
- Examples: salary, unconditional donations, government sovereign acts, pure compensation
- Not counted toward VAT threshold
04
Chapter 4
Supply Liability
Categories · Compensation · Donations · Method of Determining Liability
🔄 Method: How to Determine VAT Liability
STEP 1
Does it meet all 4 scope conditions?
If NO → Outside Scope
Art. 2, VAT Law
Art. 2, VAT Law
▶
STEP 2
Is it Zero-Rated?
Check Art. 45 list
Zero-rating takes priority
Zero-rating takes priority
▶
STEP 3
Is it Exempt?
Check Art. 46 list
No VAT, no input recovery
No VAT, no input recovery
▶
STEP 4
Standard-Rated at 5%
Default rate
Art. 3, VAT Law
Art. 3, VAT Law
⚠ Key Rule: Zero-rating ALWAYS takes priority over exemption — Art. 44, VAT Law.
🎁 Compensation, Donations & Scholarships
| Compensation / Damages | If not linked to a specific supply → Outside Scope. If linked to a supply (e.g. penalty clause) → may be Taxable | Art. 1, VAT Law |
| Unconditional Donations | No supply in return → Outside Scope. Conditional grants with something received in return → may be Taxable | Art. 1, VAT Law |
| Scholarships | Unconditional → Outside Scope. Conditional (e.g. work-back clause) → Consideration for a supply → Taxable | Art. 1, VAT Law |
📌 Categories of Supply Summary
| Taxable (5%) | Default. All UAE supplies by taxable persons unless specifically 0% or exempt | Art. 3 |
| Taxable (0%) | Specific categories in Art. 45 list only | Art. 44-45 |
| Exempt | Specific categories in Art. 46. No VAT. No input tax recovery. | Art. 46 |
| Outside Scope | Fails one or more of the 4 scope conditions. No VAT at all. | Art. 2 |
ℹ All law references in this chapter refer to the VAT Law (Federal Decree-Law No. 8 of 2017).
05
Chapter 5
Zero-Rating
Art. 45, VAT Law · Title 6, Regulation — 0% VAT; Input tax fully recoverable
✅ Zero-rated supplies are taxable supplies at 0%. Input tax on related costs is fully recoverable. Counted in the VAT registration threshold — Art. 44, VAT Law. A person making exclusively zero-rated supplies may apply for exception from registration — Art. 15, VAT Law.
🚢 Exports of Goods & Services (Art. 45(1), VAT Law)
| Goods | Must leave UAE (or enter customs suspension) within 90 days of supply. THE AUTHORITY can extend this period. | Art. 30(1), Reg. |
| Direct export | Supplier arranges transport. Must retain official & commercial evidence (e.g. exit certificate, invoice, transport docs) | Art. 30, Reg. |
| Indirect export | Customer arranges transport. Customer must obtain & provide export evidence. Goods not used/altered before export. Not in crew possession. | Art. 30(2), Reg. |
| Services (A) | Recipient has no place of residence in Implementing State AND is physically outside UAE when services performed (presence <1 month not connected to supply) | Art. 31(2), Reg. |
| Services (B) | Services actually performed outside the Implementing States; or arranging of such services to a non-resident | Art. 31, Reg. |
| Disallowed | If foreseeable at contract time that services will be received by UAE person — Art. 31(3). Failure to export goods within 90 days → treated as UAE supply. | Art. 30(9), Reg. |
✈️ International Transport (Art. 45(2–7), VAT Law)
| Qualifying transport | Begins, ends, or passes through UAE — passengers or goods | Art. 33, Reg. |
| Internal as part of international | Transport within UAE is zero-rated if it forms part of a journey from/to outside UAE | Art. 33, Reg. |
| Related goods/services | Goods consumed/sold on aircraft or ship; insurance & arranging of transport services | Art. 33(2), Reg. |
| Means of transport | Aircraft, ship, boat — designed for commercial transport of 10+ passengers or goods (not recreation/pleasure) | Art. 34, Reg. |
| Repair/maintenance | Of qualifying aircraft or vessels — zero-rated | Art. 35, Reg. |
| Air (domestic) | Zero-rated if qualifies as "international" under Warsaw Convention 1929 | Art. 45(3), VAT Law |
🥇 Investment Precious Metals (Art. 45(8), VAT Law)
- Metals: Gold, Silver, Platinum onlyArt. 36, Regulation
- Purity requirement: ≥ 99%
- Must be in form tradeable on global bullion markets
- Jewellery, rings, diamonds → Standard-rated (fail purity/form tests)
- Metal bought for non-investment purpose → Standard-rated
🏠 New Residential Buildings (Art. 45(9–11), VAT Law)
- First supply by sale or rental within 3 years of completionArt. 37, Regulation
- Conversion: zero-rated unless previously residential within 5 years of works commencingArt. 39, Regulation
- First sale of charity building for charitable purposesArt. 38, Regulation
- Excluded: Hotels, serviced apartments, hospitals, buildings without authorisation
⛽ Oil & Gas (Art. 45(12), VAT Law)
- Supplies & imports of crude oil and natural gas → Zero-rated
- Processed/refined petroleum products → Standard-rated
📚 Education (Art. 45(13), VAT Law · Art. 40, Reg.)
- Supplier and service must be recognised by federal/local government regulator
- Institution: government-owned or >50% government funded
- Related books/printed material for enrolled students → zero-rated
- Excluded: Uniforms, electronics, food, extracurricular (extra fee)
🏥 Healthcare (Art. 46, VAT Law · Art. 41, Reg.)
- Preventative & basic healthcare services
- Supplier must be licensed by Ministry of Health
- Patient = direct recipient (B2B doctor-hospital services → 5%) — VATP016
- Cosmetic surgery (not medically prescribed) → Standard-rated
- Medications/equipment: Cabinet Decision No. 56/2017
06
Chapter 6
Exempt Supplies
Art. 46, VAT Law · Title 7, Regulation — No VAT charged; Input tax NOT recoverable
⚠ Key Rules: (1) Zero-rating ALWAYS takes priority over exemption. (2) Exempt supplies are NOT counted in the VAT registration threshold. (3) Input tax on exempt supplies is NOT recoverable. If a business makes both taxable and exempt supplies → Partially Exempt → input tax must be apportioned.
💳 Financial Services (Art. 46(1) · Art. 42, Regulation)
| Exempt when | Charged via margin/spread with no explicit separate fee: currency exchange, loans, debt securities, deposits, guarantees, derivatives, life insurance payments | Art. 42(2), Reg. |
| Standard-rated when | Explicit fee charged: ATM fees, SWIFT transfer fees, account admin fees, card services, handling fees for mortgages | VATGFS1 |
| Islamic Finance | Shariah-compliant products treated same as non-Islamic equivalent for VAT purposes | Art. 42(5)-(6), Reg. |
| Trustee services | Standard-rated (unless zero-rated under Art. 31, Regulation) | VATGFS1 |
🏘️ Residential Real Estate (Art. 46(2) · Art. 43, Regulation)
| Exempt | Sale or lease of residential buildings — unless zero-rated (first supply within 3 years) | Art. 43, Reg. |
| Lease conditions | Lease >6 months OR tenant holds Emirates ID → Exempt | Art. 43, Reg. |
| Standard-rated | Lease <6 months AND no Emirates ID (e.g. hotel, serviced apartment, guest house) | Art. 37(2), Reg. |
| Farm houses | Meeting conditions = residential building → Exempt — VATP008 | VATP008 |
🌿 Bare Land (Art. 46(3) · Art. 44, Reg.) 🚌 Local Transport (Art. 46(4) · Art. 45, Reg.)
| Bare Land | Exempt if no buildings, partially completed buildings or civil engineering works. Farmland with no buildings = bare land. Built-in irrigation → excludes from exemption. | Art. 44, Reg; VATP008 |
| Local Transport | Within UAE by qualifying vehicle (bus, taxi, train, tram, boat, aircraft). Domestic flight = exempt unless international carriage under Warsaw Convention. | Art. 45, Reg. |
| Excluded | Pleasure/sightseeing trips with catering or entertainment → Standard-rated | Art. 45, Reg. |
⚖️ Partial Exemption — Input Tax Apportionment
| Directly attributable to taxable supplies | Fully recoverable | Title 10, Regulation |
| Directly attributable to exempt supplies | NOT recoverable | Title 10, Regulation |
| Residual / General overheads | Apportioned — pro-rata method based on taxable vs. total supplies (or other fair & reasonable method) | Title 10 & 11, Regulation |
07
Chapter 7
Deemed Supplies
Art. 11–12, VAT Law · Art. 5, Regulation — Business assets & private use
⚠ Deemed supplies are treated as taxable supplies. Output VAT must be accounted for. They are counted toward the VAT registration threshold — Art. 19, VAT Law. A deemed supply only arises if input tax was previously recovered on those goods/services — Art. 12(1), VAT Law.
⚡ When Does a Deemed Supply Arise? (Art. 11, VAT Law)
| 1 | Business assets gifted for nil consideration | Art. 11(1)(a), VAT Law |
| 2 | Transfer of goods to/from another Implementing State (not temporary transfer or part of another taxable supply) | Art. 11(1)(b), VAT Law |
| 3 | Goods/services bought for business but subsequently used for non-business / private purposes | Art. 11(1)(c), VAT Law |
| 4 | Goods/services held at date of deregistration | Art. 11(1)(d), VAT Law; Art. 37, VAT Law |
✅ Exceptions — No Deemed Supply Arises (Art. 12(1), VAT Law · Art. 5, Reg.)
| No input tax recovered | If no input tax was claimed on the goods/services in the first place → no deemed supply | Art. 12(1), VAT Law |
| Exempt supply | If the supply would be exempt in any case → no output VAT charge | Art. 12(1), VAT Law |
| Capital assets | Where VAT has already been adjusted via the capital assets scheme | Art. 5(1), Regulation |
| Gifts ≤ AED 500 | Per person per rolling 12-month period (excluding VAT). Above AED 500 → output tax applies. | Art. 5(1)(d), Regulation |
| De minimis | If total output VAT on ALL deemed supplies in 12 months is < AED 2,000 → no charge | Art. 5(1)(e), Regulation |
💡 Valuation of Deemed Supplies (Art. 36–37, VAT Law)
| General rule | Value = total cost incurred by the taxable person to make the deemed supply | Art. 37, VAT Law |
| Related party supply | Market value applies if: (a) consideration < market value AND (b) recipient cannot fully recover VAT on the supply | Art. 36, VAT Law |
| Deregistration goods | Value = total cost incurred. Output VAT must be included on final VAT return. | Art. 37, VAT Law |
| Private use example | Equipment cost AED 600/quarter, 40% private use → Deemed supply value = AED 240 → Output VAT = AED 12 (5% × 240) | Art. 55, Regulation |
08
Chapter 8
Value of Supply
Art. 34–42, VAT Law · Art. 25–28, Regulation
📐 General Rules
| Money consideration | Value = consideration less the tax (VAT-exclusive amount) | Art. 34(1), VAT Law |
| Non-money consideration | Value = market value of the supply at that date and location | Art. 34(2), VAT Law; Art. 25(2), Reg. |
| Prices to consumers | Must be displayed inclusive of VAT. Exception: exports and B2B (customer registered for VAT) | Art. 38, VAT Law; Art. 27, Reg. |
| Silent contracts | Where VAT not mentioned → assumed to be VAT-inclusive | Art. 38, VAT Law |
| Foreign currency | Convert to AED at official exchange rate on the date of supply | Art. 69, VAT Law |
🧮 Calculations — VAT-Inclusive Prices
| VAT element | Price × 1/21 | (5/105 simplified) |
| VAT-exclusive value | Price × 20/21 | Net value |
| Retailer prices | Displayed price is VAT-INCLUSIVE — Art. 38, VAT Law | |
| Wholesaler prices | Generally quoted VAT-EXCLUSIVE | |
Example: Retailer price AED 99 (VAT-inclusive) → VAT = 99 × 1/21 = AED 4.71 · Net = 99 × 20/21 = AED 94.29
🔧 Special Valuation Rules (Art. 35–42, VAT Law)
| Imported goods | Customs value + insurance + customs fees + excise tax + other charges | Art. 35, VAT Law |
| Related party supplies | Market value applies if: price < market value AND recipient cannot fully recover VAT | Art. 36, VAT Law |
| Deemed supplies | Total cost to supplier (market value rule overrides for related parties) | Art. 37, VAT Law |
| Vouchers | Difference between consideration received and advertised monetary value of voucher | Art. 38, VAT Law |
| Postage stamp | Face value of the stamp | Art. 39, VAT Law |
| Temp. export for repair | On re-import: value of the services rendered (not full goods value) | Art. 40, VAT Law |
| Upfront discount | Shown on tax invoice; reduces value of supply | Art. 39, VAT Law; Art. 28, Reg. |
| Volume discount | Retrospective — supplier issues tax credit note to customer | Art. 28, Regulation |
| Barter ≠ Discount | Two separate supplies — each valued independently at market value. Not a true discount. | Art. 26, Regulation |
| Foreign subsidy | Reduces value of supply; does not include UAE government consideration — Art. 39, VAT Law | Art. 28, Regulation |
🔀 Single vs. Multiple Supplies (Art. 47, VAT Law · Art. 4 & 26, Regulation)
| Single Composite Supply | One principal component + necessary/incidental elements that cannot be naturally split. VAT treatment follows the principal component. Example: flight ticket + meal (meal is incidental → follows zero-rated air transport). |
| Multiple / Mixed Supply | Two or more elements each enjoyable independently. Each element treated as a separate supply with its own VAT liability. Value apportioned using market value — Art. 26, Reg. |
💸 Disbursements vs. Reimbursements (VATP013)
| Disbursement | Payment made on behalf of client. Invoice in client's name. Exact amount recovered. No mark-up. Client authorised payment. → OUTSIDE SCOPE of VAT | VATP013 |
| Reimbursement | Expenses contracted in own name. Invoice in own name. Follows VAT treatment of the main supply. → IN SCOPE — taxable | VATP013 |
ℹ "VAT-Free" Offers: If a retailer absorbs the VAT for a promotion, VAT is still due. The retailer accounts for 5/105 × displayed price. Public Clarification VATP020 confirms this. — Art. 38, VAT Law.
UAE VAT Module A · Federal Decree-Law No. 8 of 2017 · Cabinet Decision No. 52 of 2017 · © Quick Reference Guide · For study purposes only
Federal Decree-Law No. 8 of 2017 · Module A
UAE VAT Quick
Reference Guide
General Principles · Registration · Supplies · Zero-Rating & Exemption
CH 1General Principles
CH 2VAT Registration
CH 3What is a Supply?
CH 4Supply Liability
CH 5Zero-Rating
CH 6Exempt Supplies
CH 7Deemed Supplies
CH 8Value of Supply
Federal Decree-Law No. 8 of 2017
VAT Law — Primary legislation, definitions & general principles
Cabinet Decision No. 52 of 2017
Executive Regulation — Detailed rules & limitations
Federal Decree-Law No. 28 of 2022
Law on Tax Procedures — effective 1 March 2023
Federal Decree-Law No. 13 of 2016
FTA Establishment Law — powers of the Authority
Standard Rate: 5% · Art. 3, VAT Law
Zero Rate: 0% · Art. 44, VAT Law
01
Chapter 1
General Principles
Scope · Time & Value of Supply · Output & Input Tax · Compliance
🔍 Scope of UAE VAT — 4 Conditions
| ✔ Taxable/deemed supply | Goods or services under VAT Law definition | Art. 2, VAT Law |
| ✔ Place of supply | Supply must take place in the UAE | Title 5 Ch.2, VAT Law |
| ✔ Taxable person | Registered or required to register for VAT | Art. 1, VAT Law |
| ✔ In course of business | Regular activity carried on for economic gain | Art. 1, VAT Law |
⚠ All 4 conditions must be met. If any one fails → Outside Scope of VAT.
⏱ Time of Supply (Tax Point)
| Goods | Earliest of: transfer date, possession date, assembly completion, customs date, or 12 months if returnable basis | Art. 25, VAT Law |
| Services | When services completed — or earlier if invoice/payment issued first | Art. 25, VAT Law |
| Periodic/Invoices | Earliest of: invoice date, due date on invoice, payment receipt, 1-year anniversary | Art. 26(1), VAT Law |
| Vending machines | Date funds collected from the machine | Art. 26(2), VAT Law |
| Deemed supplies | Date of supply, disposal, change of use, or deregistration | Art. 26(3), VAT Law |
💰 VAT Rates
| Standard Rate | 5% 5% | Art. 3, VAT Law |
| Zero Rate | 0% 0% | Art. 44, VAT Law |
| Exempt | No VAT charged; input tax not recoverable Exempt | Art. 46, VAT Law |
| Outside Scope | No VAT applies at all O/S | Art. 2, VAT Law |
📋 Output & Input Tax
| Output Tax | VAT charged on sales; also on gifts >AED 500 & private use | Art. 10, VAT Law |
| Input Tax | VAT on purchases for taxable supplies; requires valid tax invoice | Art. 54, VAT Law |
| Bad Debts | Write off if unpaid after 6 months; reclaim output tax | Art. 64, VAT Law |
| Value of Supply | Consideration received, exclusive of VAT | Title 5 Ch.4, VAT Law |
📅 Compliance Deadlines
| VAT Return due | 28 days after end of tax period | Art. 64, Regulation |
| Payment due | 28 days after end of tax period | Art. 64, Regulation |
| Tax Period | Generally 3 months (monthly / 6-monthly by agreement) | Art. 62, Regulation |
| Records | Min. 5 years; real estate: 15 years | Law on Tax Procedures |
| Appeals | Within 40 business days from notification; disputes >AED 100k go to court | Art. 28-29, LTP |
02
Chapter 2
VAT Registration
Mandatory · Voluntary · Non-Residents · VAT Groups · Deregistration
🔢 Registration Thresholds at a Glance
Mandatory (Residents)
AED 375,000
Art. 7(1), Regulation
Voluntary (Residents)
AED 187,500
Art. 17, VAT Law; Art. 8, Reg.
Non-Residents
No Threshold
Art. 18, VAT Law
Deregistration Limit
AED 187,500
Art. 21, VAT Law
📊 Historic & Future Tests (Art. 13, VAT Law)
| Historic Test | Applied at end of each calendar month. Look back 12 months. If taxable supplies exceed AED 375,000 → must apply to register within 30 days. Registration effective: 1st day of following month. | Art. 13, VAT Law; Art. 7, Reg. |
| Future Test | Daily test — look forward 30 days. If supplies in that window will exceed AED 375,000 → apply within 30 days. Registration effective: from the trigger date (or earlier agreed date). | Art. 13, VAT Law |
| Voluntary | Same historic & future tests apply. Effective from 1st day of month following application (or earlier agreed). Enables input VAT recovery before trading commences. | Art. 17, VAT Law; Art. 8, Reg. |
ℹ Exempt supplies and outside-scope supplies do not count toward the registration threshold. Capital assets are also excluded — Art. 20, VAT Law.
🏢 VAT Group Registration (Art. 14, VAT Law)
| Condition 1 | Each entity has UAE place of establishment or fixed establishment | |
| Condition 2 | Entities are "related parties" under the VAT Law | |
| Condition 3 | One or more persons control the others | |
| Representative | Responsible for all returns; all members jointly & severally liable for debts | Art. 11(2), Reg. |
| Intra-group supplies | Disregarded for VAT purposes | Art. 14, VAT Law |
| Amendment | Notify within 20 business days; effective from next tax period | Art. 6(2)(b), LTP |
⚠️ Special Rules
| Sole trader | Multiple trades = one registration only — VATP026 |
| Zero-rated only | May apply for exception from registration — Art. 15, VAT Law |
| Non-resident | Register within 30 days of first taxable supply; no threshold applies — Art. 18, VAT Law |
03
Chapter 3
What is a Supply?
Five Conditions · Goods vs. Services · Types of Supply
✅ Five Conditions for a Supply
| 1 | Consideration | Payment in money or kind received or expected to be received for the supply | Art. 1, VAT Law |
| 2 | Goods or Services | Goods = physical/intangible property transferred. Services = anything that is not a supply of goods | Art. 1, VAT Law |
| 3 | By a Taxable Person | Must be made by a person who is registered or required to register for VAT in the UAE | Art. 1, VAT Law |
| 4 | In the UAE | Place of supply rules determine where VAT applies — special rules for goods/services between UAE and Implementing States | Title 5 Ch.2, VAT Law; Title 4, Reg. |
| 5 | In Course of Business | Must be made in the course or furtherance of any business carried on by that person | Art. 1, VAT Law |
✅ Taxable Supplies 5% 0%
- Standard-rated at 5% — default for all UAE suppliesArt. 3, VAT Law
- Zero-rated at 0% — specific categories (exports, transport, etc.)Art. 44 & 45, VAT Law
- Counted in VAT registration threshold
- Input tax on related costs is fully recoverable
🚫 Exempt Supplies
- No VAT charged on the supplyArt. 46, VAT Law
- Input tax on related costs is NOT recoverable
- Not counted in VAT registration threshold
- Categories: financial services, residential property, bare land, local transport
⭕ Outside the Scope
- Does not meet one or more of the 5 conditions
- No VAT applies at all
- Examples: salary, unconditional donations, government sovereign acts, pure compensation
- Not counted toward VAT threshold
04
Chapter 4
Supply Liability
Categories · Compensation · Donations · Method of Determining Liability
🔄 Method: How to Determine VAT Liability
STEP 1
Does it meet all 4 scope conditions?
If NO → Outside Scope
Art. 2, VAT Law
Art. 2, VAT Law
▶
STEP 2
Is it Zero-Rated?
Check Art. 45 list
Zero-rating takes priority
Zero-rating takes priority
▶
STEP 3
Is it Exempt?
Check Art. 46 list
No VAT, no input recovery
No VAT, no input recovery
▶
STEP 4
Standard-Rated at 5%
Default rate
Art. 3, VAT Law
Art. 3, VAT Law
⚠ Key Rule: Zero-rating ALWAYS takes priority over exemption — Art. 44, VAT Law.
🎁 Compensation, Donations & Scholarships
| Compensation / Damages | If not linked to a specific supply → Outside Scope. If linked to a supply (e.g. penalty clause) → may be Taxable | Art. 1, VAT Law |
| Unconditional Donations | No supply in return → Outside Scope. Conditional grants with something received in return → may be Taxable | Art. 1, VAT Law |
| Scholarships | Unconditional → Outside Scope. Conditional (e.g. work-back clause) → Consideration for a supply → Taxable | Art. 1, VAT Law |
📌 Categories of Supply Summary
| Taxable (5%) | Default. All UAE supplies by taxable persons unless specifically 0% or exempt | Art. 3 |
| Taxable (0%) | Specific categories in Art. 45 list only | Art. 44-45 |
| Exempt | Specific categories in Art. 46. No VAT. No input tax recovery. | Art. 46 |
| Outside Scope | Fails one or more of the 4 scope conditions. No VAT at all. | Art. 2 |
ℹ All law references in this chapter refer to the VAT Law (Federal Decree-Law No. 8 of 2017).
05
Chapter 5
Zero-Rating
Art. 45, VAT Law · Title 6, Regulation — 0% VAT; Input tax fully recoverable
✅ Zero-rated supplies are taxable supplies at 0%. Input tax on related costs is fully recoverable. Counted in the VAT registration threshold — Art. 44, VAT Law. A person making exclusively zero-rated supplies may apply for exception from registration — Art. 15, VAT Law.
🚢 Exports of Goods & Services (Art. 45(1), VAT Law)
| Goods | Must leave UAE (or enter customs suspension) within 90 days of supply. THE AUTHORITY can extend this period. | Art. 30(1), Reg. |
| Direct export | Supplier arranges transport. Must retain official & commercial evidence (e.g. exit certificate, invoice, transport docs) | Art. 30, Reg. |
| Indirect export | Customer arranges transport. Customer must obtain & provide export evidence. Goods not used/altered before export. Not in crew possession. | Art. 30(2), Reg. |
| Services (A) | Recipient has no place of residence in Implementing State AND is physically outside UAE when services performed (presence <1 month not connected to supply) | Art. 31(2), Reg. |
| Services (B) | Services actually performed outside the Implementing States; or arranging of such services to a non-resident | Art. 31, Reg. |
| Disallowed | If foreseeable at contract time that services will be received by UAE person — Art. 31(3). Failure to export goods within 90 days → treated as UAE supply. | Art. 30(9), Reg. |
✈️ International Transport (Art. 45(2–7), VAT Law)
| Qualifying transport | Begins, ends, or passes through UAE — passengers or goods | Art. 33, Reg. |
| Internal as part of international | Transport within UAE is zero-rated if it forms part of a journey from/to outside UAE | Art. 33, Reg. |
| Related goods/services | Goods consumed/sold on aircraft or ship; insurance & arranging of transport services | Art. 33(2), Reg. |
| Means of transport | Aircraft, ship, boat — designed for commercial transport of 10+ passengers or goods (not recreation/pleasure) | Art. 34, Reg. |
| Repair/maintenance | Of qualifying aircraft or vessels — zero-rated | Art. 35, Reg. |
| Air (domestic) | Zero-rated if qualifies as "international" under Warsaw Convention 1929 | Art. 45(3), VAT Law |
🥇 Investment Precious Metals (Art. 45(8), VAT Law)
- Metals: Gold, Silver, Platinum onlyArt. 36, Regulation
- Purity requirement: ≥ 99%
- Must be in form tradeable on global bullion markets
- Jewellery, rings, diamonds → Standard-rated (fail purity/form tests)
- Metal bought for non-investment purpose → Standard-rated
🏠 New Residential Buildings (Art. 45(9–11), VAT Law)
- First supply by sale or rental within 3 years of completionArt. 37, Regulation
- Conversion: zero-rated unless previously residential within 5 years of works commencingArt. 39, Regulation
- First sale of charity building for charitable purposesArt. 38, Regulation
- Excluded: Hotels, serviced apartments, hospitals, buildings without authorisation
⛽ Oil & Gas (Art. 45(12), VAT Law)
- Supplies & imports of crude oil and natural gas → Zero-rated
- Processed/refined petroleum products → Standard-rated
📚 Education (Art. 45(13), VAT Law · Art. 40, Reg.)
- Supplier and service must be recognised by federal/local government regulator
- Institution: government-owned or >50% government funded
- Related books/printed material for enrolled students → zero-rated
- Excluded: Uniforms, electronics, food, extracurricular (extra fee)
🏥 Healthcare (Art. 46, VAT Law · Art. 41, Reg.)
- Preventative & basic healthcare services
- Supplier must be licensed by Ministry of Health
- Patient = direct recipient (B2B doctor-hospital services → 5%) — VATP016
- Cosmetic surgery (not medically prescribed) → Standard-rated
- Medications/equipment: Cabinet Decision No. 56/2017
06
Chapter 6
Exempt Supplies
Art. 46, VAT Law · Title 7, Regulation — No VAT charged; Input tax NOT recoverable
⚠ Key Rules: (1) Zero-rating ALWAYS takes priority over exemption. (2) Exempt supplies are NOT counted in the VAT registration threshold. (3) Input tax on exempt supplies is NOT recoverable. If a business makes both taxable and exempt supplies → Partially Exempt → input tax must be apportioned.
💳 Financial Services (Art. 46(1) · Art. 42, Regulation)
| Exempt when | Charged via margin/spread with no explicit separate fee: currency exchange, loans, debt securities, deposits, guarantees, derivatives, life insurance payments | Art. 42(2), Reg. |
| Standard-rated when | Explicit fee charged: ATM fees, SWIFT transfer fees, account admin fees, card services, handling fees for mortgages | VATGFS1 |
| Islamic Finance | Shariah-compliant products treated same as non-Islamic equivalent for VAT purposes | Art. 42(5)-(6), Reg. |
| Trustee services | Standard-rated (unless zero-rated under Art. 31, Regulation) | VATGFS1 |
🏘️ Residential Real Estate (Art. 46(2) · Art. 43, Regulation)
| Exempt | Sale or lease of residential buildings — unless zero-rated (first supply within 3 years) | Art. 43, Reg. |
| Lease conditions | Lease >6 months OR tenant holds Emirates ID → Exempt | Art. 43, Reg. |
| Standard-rated | Lease <6 months AND no Emirates ID (e.g. hotel, serviced apartment, guest house) | Art. 37(2), Reg. |
| Farm houses | Meeting conditions = residential building → Exempt — VATP008 | VATP008 |
🌿 Bare Land (Art. 46(3) · Art. 44, Reg.) 🚌 Local Transport (Art. 46(4) · Art. 45, Reg.)
| Bare Land | Exempt if no buildings, partially completed buildings or civil engineering works. Farmland with no buildings = bare land. Built-in irrigation → excludes from exemption. | Art. 44, Reg; VATP008 |
| Local Transport | Within UAE by qualifying vehicle (bus, taxi, train, tram, boat, aircraft). Domestic flight = exempt unless international carriage under Warsaw Convention. | Art. 45, Reg. |
| Excluded | Pleasure/sightseeing trips with catering or entertainment → Standard-rated | Art. 45, Reg. |
⚖️ Partial Exemption — Input Tax Apportionment
| Directly attributable to taxable supplies | Fully recoverable | Title 10, Regulation |
| Directly attributable to exempt supplies | NOT recoverable | Title 10, Regulation |
| Residual / General overheads | Apportioned — pro-rata method based on taxable vs. total supplies (or other fair & reasonable method) | Title 10 & 11, Regulation |
07
Chapter 7
Deemed Supplies
Art. 11–12, VAT Law · Art. 5, Regulation — Business assets & private use
⚠ Deemed supplies are treated as taxable supplies. Output VAT must be accounted for. They are counted toward the VAT registration threshold — Art. 19, VAT Law. A deemed supply only arises if input tax was previously recovered on those goods/services — Art. 12(1), VAT Law.
⚡ When Does a Deemed Supply Arise? (Art. 11, VAT Law)
| 1 | Business assets gifted for nil consideration | Art. 11(1)(a), VAT Law |
| 2 | Transfer of goods to/from another Implementing State (not temporary transfer or part of another taxable supply) | Art. 11(1)(b), VAT Law |
| 3 | Goods/services bought for business but subsequently used for non-business / private purposes | Art. 11(1)(c), VAT Law |
| 4 | Goods/services held at date of deregistration | Art. 11(1)(d), VAT Law; Art. 37, VAT Law |
✅ Exceptions — No Deemed Supply Arises (Art. 12(1), VAT Law · Art. 5, Reg.)
| No input tax recovered | If no input tax was claimed on the goods/services in the first place → no deemed supply | Art. 12(1), VAT Law |
| Exempt supply | If the supply would be exempt in any case → no output VAT charge | Art. 12(1), VAT Law |
| Capital assets | Where VAT has already been adjusted via the capital assets scheme | Art. 5(1), Regulation |
| Gifts ≤ AED 500 | Per person per rolling 12-month period (excluding VAT). Above AED 500 → output tax applies. | Art. 5(1)(d), Regulation |
| De minimis | If total output VAT on ALL deemed supplies in 12 months is < AED 2,000 → no charge | Art. 5(1)(e), Regulation |
💡 Valuation of Deemed Supplies (Art. 36–37, VAT Law)
| General rule | Value = total cost incurred by the taxable person to make the deemed supply | Art. 37, VAT Law |
| Related party supply | Market value applies if: (a) consideration < market value AND (b) recipient cannot fully recover VAT on the supply | Art. 36, VAT Law |
| Deregistration goods | Value = total cost incurred. Output VAT must be included on final VAT return. | Art. 37, VAT Law |
| Private use example | Equipment cost AED 600/quarter, 40% private use → Deemed supply value = AED 240 → Output VAT = AED 12 (5% × 240) | Art. 55, Regulation |
08
Chapter 8
Value of Supply
Art. 34–42, VAT Law · Art. 25–28, Regulation
📐 General Rules
| Money consideration | Value = consideration less the tax (VAT-exclusive amount) | Art. 34(1), VAT Law |
| Non-money consideration | Value = market value of the supply at that date and location | Art. 34(2), VAT Law; Art. 25(2), Reg. |
| Prices to consumers | Must be displayed inclusive of VAT. Exception: exports and B2B (customer registered for VAT) | Art. 38, VAT Law; Art. 27, Reg. |
| Silent contracts | Where VAT not mentioned → assumed to be VAT-inclusive | Art. 38, VAT Law |
| Foreign currency | Convert to AED at official exchange rate on the date of supply | Art. 69, VAT Law |
🧮 Calculations — VAT-Inclusive Prices
| VAT element | Price × 1/21 | (5/105 simplified) |
| VAT-exclusive value | Price × 20/21 | Net value |
| Retailer prices | Displayed price is VAT-INCLUSIVE — Art. 38, VAT Law | |
| Wholesaler prices | Generally quoted VAT-EXCLUSIVE | |
Example: Retailer price AED 99 (VAT-inclusive) → VAT = 99 × 1/21 = AED 4.71 · Net = 99 × 20/21 = AED 94.29
🔧 Special Valuation Rules (Art. 35–42, VAT Law)
| Imported goods | Customs value + insurance + customs fees + excise tax + other charges | Art. 35, VAT Law |
| Related party supplies | Market value applies if: price < market value AND recipient cannot fully recover VAT | Art. 36, VAT Law |
| Deemed supplies | Total cost to supplier (market value rule overrides for related parties) | Art. 37, VAT Law |
| Vouchers | Difference between consideration received and advertised monetary value of voucher | Art. 38, VAT Law |
| Postage stamp | Face value of the stamp | Art. 39, VAT Law |
| Temp. export for repair | On re-import: value of the services rendered (not full goods value) | Art. 40, VAT Law |
| Upfront discount | Shown on tax invoice; reduces value of supply | Art. 39, VAT Law; Art. 28, Reg. |
| Volume discount | Retrospective — supplier issues tax credit note to customer | Art. 28, Regulation |
| Barter ≠ Discount | Two separate supplies — each valued independently at market value. Not a true discount. | Art. 26, Regulation |
| Foreign subsidy | Reduces value of supply; does not include UAE government consideration — Art. 39, VAT Law | Art. 28, Regulation |
🔀 Single vs. Multiple Supplies (Art. 47, VAT Law · Art. 4 & 26, Regulation)
| Single Composite Supply | One principal component + necessary/incidental elements that cannot be naturally split. VAT treatment follows the principal component. Example: flight ticket + meal (meal is incidental → follows zero-rated air transport). |
| Multiple / Mixed Supply | Two or more elements each enjoyable independently. Each element treated as a separate supply with its own VAT liability. Value apportioned using market value — Art. 26, Reg. |
💸 Disbursements vs. Reimbursements (VATP013)
| Disbursement | Payment made on behalf of client. Invoice in client's name. Exact amount recovered. No mark-up. Client authorised payment. → OUTSIDE SCOPE of VAT | VATP013 |
| Reimbursement | Expenses contracted in own name. Invoice in own name. Follows VAT treatment of the main supply. → IN SCOPE — taxable | VATP013 |
ℹ "VAT-Free" Offers: If a retailer absorbs the VAT for a promotion, VAT is still due. The retailer accounts for 5/105 × displayed price. Public Clarification VATP020 confirms this. — Art. 38, VAT Law.
UAE VAT Module A · Federal Decree-Law No. 8 of 2017 · Cabinet Decision No. 52 of 2017 · © Quick Reference Guide · For study purposes only