UAE VAT Glossary
Comprehensive dictionary of UAE VAT terms, definitions, and FTA terminology.
VAT (Value Added Tax)
A consumption tax charged at 5% on most goods and services in the UAE, implemented on January 1, 2018.
FTA (Federal Tax Authority)
The UAE government body responsible for administering, collecting, and enforcing federal taxes including VAT and Corporate Tax.
TRN (Tax Registration Number)
A unique 15-digit number issued by the FTA to VAT-registered businesses, starting with '100'.
Taxable Person
Any individual or entity registered or required to be registered for VAT in the UAE.
Tax Period
The period for which a VAT return must be filed, typically monthly or quarterly depending on business turnover.
Standard Rate
The 5% VAT rate applied to most goods and services in the UAE.
Zero-Rated Supply
Goods or services taxed at 0% VAT. Businesses can still recover input VAT on related expenses. Examples: exports, healthcare, education.
Exempt Supply
Goods or services not subject to VAT. Businesses cannot recover input VAT on related expenses. Examples: residential rent, financial services.
Out of Scope
Transactions that fall outside the UAE VAT system entirely, such as certain government activities.
Output VAT
VAT collected by a business on its sales of goods and services to customers.
Input VAT
VAT paid by a business on its purchases of goods and services from suppliers.
Net VAT
The difference between Output VAT and Input VAT. If positive, you owe the FTA; if negative, you may claim a refund.
VAT Recovery
The process of claiming back input VAT paid on business expenses from the FTA.
Mandatory Registration
Businesses must register for VAT if taxable supplies exceed AED 375,000 in the past 12 months or are expected to exceed this in the next 30 days.
Voluntary Registration
Businesses may choose to register if taxable supplies or expenses exceed AED 187,500. Useful for recovering input VAT.
VAT Group
Two or more related businesses that can register as a single taxable person for VAT purposes, submitting one return.
Deregistration
The process of canceling VAT registration when a business no longer meets registration requirements or ceases trading.
Tax Invoice
A document issued by a VAT-registered supplier showing VAT details. Required for supplies over AED 10,000 and B2B transactions.
Simplified Tax Invoice
A shorter invoice format allowed for B2C supplies under AED 10,000, with fewer mandatory fields.
Tax Credit Note
A document issued to reduce the VAT amount on a previous invoice, typically for returns, refunds, or corrections.
Tax Debit Note
A document issued to increase the VAT amount on a previous invoice when the original amount was understated.
VAT Return
A form submitted to the FTA showing output VAT, input VAT, and net VAT payable or refundable for a tax period.
Filing Deadline
The date by which a VAT return must be submitted, typically the 28th day of the month following the tax period end.
Voluntary Disclosure
Self-reporting an error or omission in a previous VAT return to the FTA, which may reduce penalties.
VAT Audit
An examination by the FTA of a business's VAT records to verify compliance with tax laws.
Reverse Charge Mechanism
When the recipient of goods/services (rather than the supplier) accounts for VAT. Applies to certain imported services and specified goods.
Designated Zone
A free zone specified by Cabinet Decision as being outside the UAE for VAT purposes for certain transactions.
Profit Margin Scheme
A VAT scheme for second-hand goods where VAT is calculated only on the profit margin, not the full selling price.
Tourist Refund Scheme
A system allowing tourists to claim VAT refunds on purchases made in the UAE when departing the country.
Capital Assets Scheme
Special rules for adjusting input VAT recovery on capital assets over their useful life.
Administrative Penalty
A fixed or percentage-based fine imposed by the FTA for VAT violations such as late filing or incorrect returns.
Late Filing Penalty
AED 1,000 for first late submission, AED 2,000 for repeat offenses within 24 months.
Late Payment Penalty
2% immediately after due date, plus 4% if unpaid after 7 days, plus 1% daily after one month (max 300%).
Late Registration Penalty
AED 10,000 for failing to register for VAT when required.
Place of Supply
Rules determining where a supply is deemed to take place for VAT purposes, affecting which country's VAT applies.
Date of Supply
The date when VAT becomes due on a transaction, typically the earlier of invoice date or payment receipt.
Continuous Supply
Ongoing supplies like rent or subscriptions where VAT is due periodically or on payment.
Deemed Supply
Transactions treated as taxable supplies even without consideration, such as gifts over AED 500 or personal use of business assets.
Import
Bringing goods into the UAE from outside the GCC, subject to import VAT at customs.
Export
Sending goods outside the GCC, zero-rated if proper export documentation is maintained.
Corporate Tax
A 9% tax on business profits exceeding AED 375,000, introduced in the UAE from June 1, 2023.
Small Business Relief
A relief allowing businesses with revenue under AED 3 million to be treated as having no taxable income for corporate tax (until Dec 2026).
Tax Records
Documents and data that must be maintained for VAT purposes, including invoices, returns, and accounting records.
Record Retention
The requirement to keep VAT records for at least 5 years (15 years for real estate).
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