VAT (Value Added Tax) is a consumption tax imposed on the supply of goods and services. It was introduced in the UAE on January 1, 2018, at a standard rate of 5%.
Businesses with taxable supplies and imports exceeding AED 375,000 annually must register. Voluntary registration is allowed for businesses with turnover exceeding AED 187,500.
Most goods and services are subject to 5% VAT. However, some are zero-rated (e.g., certain exports, international transportation) or exempt (e.g., residential rent, local passenger transport).
Zero-rated: Taxed at 0%, but input VAT can be reclaimed.
Exempt: Not taxed, and input VAT cannot be reclaimed.
VAT returns are filed quarterly or monthly via the Federal Tax Authority (FTA) portal. Returns must include total sales, purchases, output tax, and input tax.
Penalties include fines for late registration, late filing, late payment, or providing incorrect information. These can range from AED 1,000 to several thousand dirhams, depending on the violation.
Only if an individual is conducting economic activities that meet the registration threshold. Regular consumers do not register or pay VAT directly; it’s included in the purchase price.
Yes, imports are subject to VAT, and businesses must account for VAT on imports through a reverse charge mechanism or pay at the port of entry.
Input VAT can be reclaimed on eligible business expenses by including it in the VAT return. Proper tax invoices and documentation must be maintained.
Register online through the FTA website by creating an account and submitting the required documents (trade license, passport copies, financial records, etc.).
The UAE Corporate Tax regime became effective for financial years starting on or after June 1, 2023. For businesses with a calendar year (January–December), the regime applies from January 1, 2024.
– 0% for taxable income up to AED 375,000
– 9% for taxable income exceeding AED 375,000
– 15% minimum tax applies to certain large multinational companies under OECD rules.
UAE Corporate Tax applies to:
Businesses with annual revenue not exceeding AED 3 million may elect to be treated as not having any taxable income. This relief applies until December 31, 2026.
Yes, companies can carry forward tax losses indefinitely and use them to offset future taxable income, subject to a cap of 75% of taxable income per year.
Businesses must:
Yes, companies may form a tax group if:
Yes, UAE businesses can benefit from double taxation agreements by:
Penalties include:
– Register and obtain a Tax Registration Number (TRN)
– Maintain accurate financial records
– Identify eligible deductions and exemptions
– Ensure proper transfer pricing compliance
– Stay updated on tax laws and filing deadlines
– Consider professional tax advisory support
An annual audit is mandatory for companies registered in UAE free zones and some mainland companies, depending on their legal structure and licensing authority. However, it’s considered a best practice for all businesses to maintain audited financial statements.
Audits help ensure financial transparency, support loan or investment applications, verify compliance with laws (like VAT or corporate tax), and improve internal controls and decision-making.
Audits must be conducted by licensed and approved audit firms registered with the relevant regulatory bodies or free zone authorities.
Businesses typically need to provide:
The duration varies based on company size and complexity but typically takes 2–6 weeks from the time all documents are submitted.
Statutory Audit is a legal requirement to verify financial accuracy for external stakeholders.
Internal Audit focuses on evaluating internal controls, risk management, and operational efficiency, often initiated by the company itself.
Yes, most Free Zone Authorities (e.g., DMCC, JAFZA, DAFZA) require annual audited financial statements to renew licenses.
With the introduction of Corporate Tax, businesses must maintain accurate financial records that may be subject to tax audits by the Federal Tax Authority (FTA) to verify compliance and tax accuracy.
A tax audit is an official inspection by the FTA to ensure the taxpayer complies with VAT or corporate tax laws. The FTA may request access to books, records, and transactions.
Companies should maintain:
An internal audit is an independent, objective evaluation of a company’s internal controls, risk management, and governance processes. It helps ensure the effectiveness of operations and compliance with laws and policies.
Internal audits are not legally mandatory for most UAE companies, but they are highly recommended, especially for large enterprises, listed companies, and entities regulated by the Central Bank or DFSA.
The main purposes include:
Internal audits can be performed by an in-house internal audit team or outsourced to licensed internal audit firms with expertise in UAE business regulations.
The frequency depends on the business size, complexity, and risk level. Typically, internal audits are conducted quarterly or annually, but some areas may require ongoing reviews.
Common areas include:
Internal Audit is ongoing, focuses on risk and process improvement, and is for internal use.
External Audit is periodic, focuses on financial accuracy, and is intended for external stakeholders like regulators or investors.
Yes, internal audits play a key role in detecting, preventing, and mitigating fraud by assessing internal controls and highlighting weaknesses or unusual transactions.
Internal audits generally follow the International Standards for the Professional Practice of Internal Auditing issued by the Institute of Internal Auditors (IIA). Some industries may also follow sector-specific standards (e.g., banking, insurance).
– Improved governance and accountability
– Enhanced operational efficiency
– Better risk management
– Timely compliance with UAE laws (e.g., VAT, Corporate Tax)
– Increased investor and stakeholder confidence
The UAE offers several types of visas including:
Tourist visas can be applied for through:
A residence visa allows foreign nationals to live and work in the UAE. It is required for:
Validity varies based on the visa type:
The Golden Visa is a long-term residency visa (5 or 10 years) granted to:
Yes, UAE residents earning a minimum salary of AED 4,000 to AED 10,000 (depending on the case) can sponsor their spouse, children, and in some cases, parents.
A UAE residence visa becomes invalid if the holder stays outside the UAE for more than 180 consecutive days, unless holding a Golden Visa, which allows longer absences.
Yes, in most cases, a change of status can be done within the UAE without exiting, subject to approval and payment of applicable fees.
Freelance visas are available in Free Zones (like Dubai Media City, Fujairah Creative City) for individuals in fields like media, tech, and education. Applicants need:
To cancel a visa:
Bookkeeping is the process of recording daily financial transactions.
Accounting involves interpreting, classifying, analyzing, reporting, and summarizing this financial data.
Yes. Under UAE Commercial Companies Law and for compliance with VAT and Corporate Tax regulations, businesses are required to maintain proper books of accounts for at least 5 years.
The two main methods are:
Cash basis: Revenues and expenses are recorded when cash is received or paid.
Accrual basis: Revenues and expenses are recorded when they are earned or incurred, regardless of cash movement (required for VAT and tax reporting in the UAE).
– Income Statement (Profit & Loss)
– Balance Sheet
– Cash Flow Statement
– Statement of Changes in Equity
Bookkeeping ensures:
Ideally, bookkeeping should be updated daily or weekly. At a minimum, monthly updates are recommended to ensure accurate financial monitoring.
Yes, small businesses can manage it in-house using tools like QuickBooks, Xero, or Zoho Books. However, many outsource to accounting firms to ensure compliance and accuracy.
Businesses should keep:
An accountant:
According to UAE law, all accounting records must be retained for at least 5 years, and in some cases, up to 15 years depending on the business type and regulation.
ESR was introduced to align with international tax standards set by the OECD and EU, ensuring that UAE entities engaged in certain business activities have substantial economic presence in the UAE.
The following “Relevant Activities” fall under ESR:
All UAE entities (mainland, free zone, and offshore) that undertake any of the relevant activities during a financial period must:
Entities must:
The ESR Notification must be submitted within 6 months from the end of the financial year, and the ESR Report (if applicable) must be filed within 12 months from the end of the same financial year.
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