Registration thresholds, filing periods, input and output tax, the VAT 201 form box by box, common mistakes, current penalties and the 2026 deadline calendar.
By Mohamed Ashfaq, Chartered Accountant · Updated 2026-09-08 · 12 min read
Value Added Tax has applied in the UAE since 1 January 2018 at a standard rate of 5%. Registered businesses charge VAT on their sales (output tax), recover VAT on eligible purchases (input tax) and pay the difference to the Federal Tax Authority each tax period. The rate is low, but the rules on tax invoices, tax points, imports, real estate and recoverable expenses are detailed, and penalties are automatic.
Zero-rated supplies (exports, international transport, certain healthcare and education) count toward the threshold; exempt supplies (residential rent, bare land, local passenger transport, some financial services) do not. Voluntary registration usually pays off for exporters, start-ups with heavy set-up costs and businesses selling to VAT-registered customers.
Most businesses file quarterly; the FTA assigns monthly periods to businesses with turnover above AED 150 million and can approve monthly filing on request for businesses in a refund position. Returns and payment are due by the 28th day of the month following the end of the tax period (the next business day if the 28th falls on a weekend or holiday).
Output tax is VAT charged on your taxable supplies. Input tax is VAT you paid on purchases used for taxable supplies, recoverable only with a valid tax invoice showing the supplier's TRN. Net VAT payable is output tax minus recoverable input tax; a negative figure can be carried forward or refunded.
Input tax is blocked on entertainment for non-employees, motor vehicles available for personal use, and goods or services used for exempt supplies. Businesses making both taxable and exempt supplies must apportion input tax.
| Failure | Penalty |
|---|---|
| Late registration | AED 10,000 |
| Late return | AED 1,000 first time; AED 2,000 for a repeat within 24 months |
| Late payment | 2% of unpaid tax immediately, then 4% per month from one month after the due date, up to 300% |
| Incorrect return | AED 1,000 first time, AED 3,000 for a repeat, plus a percentage-based penalty unless corrected by voluntary disclosure |
| Late deregistration | AED 1,000 per month, up to AED 10,000 |
| Failure to keep records | AED 10,000; AED 20,000 for a repeat |
| Tax period | Return and payment due |
|---|---|
| Q3 2026 (Jul–Sep) | 28 October 2026 |
| Q4 2026 (Oct–Dec) | 28 January 2027 |
| Q1 2027 (Jan–Mar) | 28 April 2027 |
| Q2 2027 (Apr–Jun) | 28 July 2027 |
Your own quarters may differ — the FTA assigns them at registration, so check your tax period on EmaraTax.
Yes. A nil return is still required for every tax period; failing to file attracts the late-return penalty.
The FTA aims to process refund claims within 20 business days of a complete application; requests for documents extend this.
Errors with a tax effect of AED 10,000 or less can be corrected in the next return; larger errors require a voluntary disclosure within 20 business days of discovery.
VAT charged must be paid to the FTA even if you were not registered, and penalties may apply. Register immediately and take advice before filing.
Generally no, except for employee-related costs required by law or normal business practice. Client meals, events and gifts are blocked.
No. One legal entity files one return covering all branches, though records should be kept per branch.
Founder of Ashfaq and Associates, Dubai. Chartered Accountant (ICAI) with 15+ years in audit and tax across India and the UAE. About the firm →
This guide is general information based on UAE law and FTA guidance as at the update date, not professional advice. Rules change; confirm your position with a Chartered Accountant before acting.
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