UAE VAT, both directions

VAT has applied in the UAE at 5% since 1 January 2018. It is a tax on consumption, not on your margin, so the mechanics matter more than the rate. You charge VAT on what you sell, you reclaim VAT on what you buy for the business, and four times a year you pay the difference to the Federal Tax Authority. If your input VAT exceeds your output VAT for a period, you are in a refund position rather than a payment one.

When you have to register

Registration becomes mandatory once your taxable supplies exceed AED 375,000 across the previous twelve months, or once you expect to exceed it within the next thirty days. Voluntary registration is available from AED 187,500, which is worth considering if you sell mostly to VAT-registered businesses and carry real input VAT, because those customers reclaim what you charge them while you recover your own costs.

The twelve-month test is rolling, not a calendar year. Businesses get caught by this after one unusually strong quarter, so it is worth checking the trailing twelve-month figure rather than waiting for a year end.

Zero-rated is not the same as exempt

Both mean no VAT is charged to the customer, and that is where the similarity stops. The difference sits in whether you can recover the VAT you paid on your own costs.

Zero-rated (0%)	Exports outside the GCC implementing states, international transport, certain education and healthcare, the first supply of new residential property within three years of completion, and investment-grade precious metals. You charge nothing, and you still recover input VAT. Registration duties still apply.
Exempt	Bare land, local passenger transport, certain financial services, and residential leases after that first supply. You charge nothing and you cannot recover the input VAT attributable to those supplies, which makes the VAT a real cost to you.

A business making both taxable and exempt supplies has to apportion its input VAT, and that apportionment is one of the more common things the FTA queries on audit.

Returns, deadlines and records

Most businesses file quarterly, and larger ones file monthly. The return and the payment are both due within 28 days of the end of the tax period. When the 28th falls on a weekend or a public holiday the deadline moves to the next business day. Filing runs through EmaraTax.

A valid tax invoice has to be issued within fourteen days of the date of supply, and it needs the words "Tax Invoice", both parties' details, your TRN, the date, a description, the VAT amount in AED and the total. Records are kept for five years, and for real estate the period is fifteen.

Reverse charge, briefly

When you import goods or buy services from a supplier outside the UAE, the reverse charge mechanism makes you account for the VAT yourself. You declare it as output VAT and, if you are entitled to full recovery, reclaim the same amount as input VAT in the same return, so the cash effect is usually nil. Missing the entries entirely is still an error, and it shows up quickly against customs data.

What goes wrong most often

Late registration after a strong trailing twelve months. Treating exempt supplies as zero-rated and over-recovering input VAT. Reclaiming VAT on blocked items such as entertainment and most personal-use motor vehicles. Missing the 28-day deadline by treating it as a month end. And filing a VAT return that does not reconcile with the revenue reported on the corporate tax return, which EmaraTax now compares directly.

If a deadline has already been missed, the penalty calculator shows the exposure, and the disputes guide covers reconsideration.