UAE VAT & Accounting Compliance: Everything You Need to Know
UAE VAT operates at a standard rate of 5%, introduced in 2018, with businesses required to register if taxable supplies and imports exceed AED 375,000 annually. Accounting compliance aligns with International Financial Reporting Standards (IFRS) for financial statements. Recent amendments via Federal Decree-Law No. 16 of 2025, effective January 1, 2026, simplify procedures like reverse charge mechanisms and set refund timelines. VAT Registration Mandatory registration applies when taxable supplies and imports surpass AED 375,000 over the past 12 months or are expected to within 30 days; voluntary registration starts at AED 187,500. Non-residents face no threshold and register electronically via the Federal Tax Authority (FTA) portal, typically processed in 2-3 weeks. Late registration incurs a AED 10,000 penalty. VAT Filing Process Registered businesses file returns quarterly (for turnover below AED 150 million) or monthly via the FTA's EmaraTax portal by the 28th day after the tax period ends. Returns calculate net VAT liability as output tax minus recoverable input tax; excess input tax carries forward. For Q4 2025, the deadline is January 28, 2026. Key Compliance Rules Maintain records for at least five years, prepare audited financial statements per IFRS (mandatory for most LLCs and free zones), and ensure accurate bookkeeping under Commercial Companies Law. Businesses must issue VAT invoices for standard-rated supplies and adhere to penalties for noncompliance, such as fines for late filings. 2026 updates include removing self-invoicing for reverse charge and stricter input tax credit rules.
Recent Changes Amendments effective January 2026 ease reverse charge compliance, impose a five-year refund deadline, and enhance transparency without altering the 5% rate. Businesses should review documentation and controls ahead of implementation. These align UAE rules with global standards for efficiency.
In conclusion, Lewis and Pecker – Chartered Accountants stand out as a trusted partner in Dubai for comprehensive corporate and VAT tax services. With deep regulatory knowledge, practical expertise, and a client-focused approach, they help businesses stay compliant, optimize tax positions, and grow with confidence in the UAE’s evolving tax landscape.
