VAT Law & Regulation

General Guidance

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What is VAT ?

Value-Added Tax or VAT is a tax on the consumption or use of goods and services levied at the point of sale. VAT is a form of indirect tax and is used in more than 180 countries around the world. All OECD countries except for the US have VAT (or a variation). While it feels exactly the same as a general sales tax to end-consumers, VAT is a more sophisticated tax and overcomes many challenges that affect the general sales tax.


VAT is charged at each step of the 'supply chain'. End consumers generally bear the VAT cost while registered businesses collect and account for the tax, in a way acting as a tax collector on behalf of the Federal Tax Authority. Only VAT registered businesses will need to charge and account for VAT.  please refer below section to understand obligations under the UAE VAT law and VAT in Dubai & Consulting in Dubai . business and management consultant

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Why VAT ?

The introduction of taxes in the UAE is part of a GCC-wide initiative to diversify regional economies. Given the overall reduction in oil prices in recent years, it has been necessary for the GCC member states to explore other revenue raising measures and reduce dependency on hydrocarbons as the key contributor to the public purse. As a result, the GCC member states have agreed to sign unified framework agreements for the implementation of VAT and Excise taxes. Member states will also implement their own domestic legislation that will govern the introduction of these taxes. The UAE’s citizens and residents enjoy exceptional public services, such as healthcare, roads, education, parks, social services and waste management. The full cost of these services is paid for by the government . 


The introduction of VAT and Excise taxes will help the UAE diversify sources of revenue so that government departments can continue to deliver excellent public services and ensure a high quality of life for coming generations. This is also in line with a key pillar of the UAE's Vision 2021 – The Sustainability of Infrastructure – more information about which can be found here. In addition, taxation allows governments to correct certain behaviours that are detrimental to society and which cannot be left to the market to regulate. Excise taxes on products that are harmful to human health are a good example of this.

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Executive Regulations Cabinet Decision No 52 of 2017 (pdf)

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VAT-Returns-User-Guide_English (pdf)

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