Privacy Management Group

EN 4.3 Dubai VAT / Sales TaxDenis2026-01-25T11:03:44+00:00

VAT in Dubai - VAT

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Dubai / Taxes in Dubai Businesses

Value Added Tax in Dubai

The VAT in the United Arab Emirates

On January 1, 2018, a Value Added Tax (VAT) at 5% was introduced in the United Arab Emirates. For goods and services exported abroad or provided outside of the UAE, however, a VAT rate of 0% applies.

The zero percent VAT rate also applies to international transport services, deliveries of natural gas and oil, and specific sectors such as education, health, and finance.

Table of Contents

Value Added Tax in the UAE Free Trade Zones

Registration of UAE Companies for Value Added Tax

The Formation of VAT Groups in the UAE

Documentation Obligation for Companies in the UAE

Input Tax Credit for VAT in the UAE

Tax Consulting in Dubai and for the entire UAE

Value Added Tax in the UAE Free Trade Zones

Certain transactions of goods between companies located in the UAE Free Trade Zones are not subject to value added tax. However, the provision of services within the free trade zones is subject to VAT.

Registration of UAE Companies for Value Added Tax

For companies based in the United Arab Emirates, the threshold for VAT registration is at an annual profit from AED 375,000 . The threshold for voluntary VAT registration starts from AED 187,500 profit per year.

Companies that provide services within the UAE but are based outside the United Arab Emirates are not subject to a VAT registration threshold.

The Formation of VAT Groups in the UAE

The formation of “VAT groups” is permitted in the UAE, provided that certain conditions are met. Our tax advisors will be happy to provide you with detailed information on this topic.

Steuerberater in Dubai

Documentation Obligation for Companies in the UAE

Every company located within the United Arab Emirates is subject to a documentation and record-keeping requirement, as well as the obligation to timely submit a turnover or value added tax return (monthly or quarterly, as specified by the authority).

Input Tax Credit for VAT in the UAE

Excess input taxes can be reclaimed by the company, where a specific procedure applies. Alternatively, it is advisable to carry forward VAT credits and deduct them from the company’s future VAT liabilities.

Tax Consulting in Dubai and for the entire UAE

Privacy Management Group has been active in the United Arab Emirates for over 10 years. In cooperation with reputable and experienced local tax consultants, we are happy to take care of your concerns and stand by you as your German-speaking partner in the UAE.

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Our Terms & Conditions as well as our Terms of Use apply.

Aspect	Dubai Freezone Company*
Jurisdiction	The free trade zones are independent economic zones with their own administration. Each zone has its own procedures for formation, licensing and supervision.
Ownership	100% foreign ownership is possible. A local sponsor is not required.
Scope of activities	The freezone is ideal for internationally active companies that operate outside the United Arab Emirates or maintain business relationships with other freezones. Direct trade on the local market is generally not provided for, but can be enabled through supplementary models (e.g. distribution partners or additional license).
License / Business purpose	Each freezone offers industry-specific licenses, e.g. for trade, services, technology or production. The granting is done directly by the respective freezone authority.
Office / Establishment	Each freezone company requires an establishment – e.g. Flex-Office, Shared Desk or an own office. We offer Full-Service packages that already contain a complete solution and enable immediate operational readiness.
Visa / Employees	Entrepreneurs and employees can obtain Residency visas. The number depends on license and office size.
Corporate tax (Corporate Tax)	Profits up to AED 375,000 per year remain tax-free. Only the profit exceeding this is taxed at 9%. Companies in a freezone that meet the legal requirements can continue to apply the tax rate of 0% on qualifying income. Small businesses with an annual turnover of up to AED 3,000,000 are completely exempt from corporate tax until the end of 2026.
Profit transfer / Withholding tax	Profits and capital can be transferred abroad without restriction. No withholding tax is levied.
Costs	Formation and ongoing costs are usually cheaper and clearly calculable. After individual consultation, we determine the optimal location and, upon request, submit a tailor-made offer that includes all services.
Conclusion	A Freezone company in Dubai is the ideal structure for entrepreneurs who are internationally active or want to conduct business with partners worldwide from Dubai. It offers full ownership rights, tax advantages and a modern, business-friendly environment.

* Although we use the terms "Dubai Free Trade Zone" and "Dubai Mainland" above, the content statements also apply to various free trade zones and mainlands of other emirates. The above comparison of various aspects serves only as your orientation and therefore in no way replaces expert advice.

Aspect	Dubai Mainland Company*
Jurisdiction	The mainland is subject to the state authority Department of Economy & Tourism (formerly DET) and other onshore authorities. These control all economic activities within the UAE.
Ownership	In many cases, 100% foreign ownership is also possible. In individual, regulated areas, special approvals may be required.
Scope of activities	Mainland companies may conduct business without restriction within the entire UAE. They are therefore the right choice for companies that want to be locally present and offer their products or services directly on site.
License / Business purpose	Licenses are granted centrally by the state onshore authorities. The procedures are more extensive and often subject to additional requirements.
Office / Establishment	On the mainland, a fixed business location is mandatory. As a rule, stricter area requirements and rental obligations apply here.
Visa / Employees	Mainland companies can also apply for visas for owners and employees.
Corporate tax (Corporate Tax)	For mainland companies, the same principle applies: profits up to AED 375,000 remain tax-free, above that the rate of 9% applies. This regulation ensures moderate tax burden and high planning security.
Profit transfer / Withholding tax	Mainland companies can also transfer profits freely. No withholding tax is levied either.
Costs	Formation is more complex and generally more cost-intensive. State fees, rental costs and administrative requirements are higher.
Conclusion	A Mainland company is suitable for entrepreneurs who want to be locally business active in the UAE – for example in trade, gastronomy or services for customers within the emirates.

* Although we use the terms "Dubai Free Trade Zone" and "Dubai Mainland" above, the content statements also apply to various free trade zones and mainlands of other emirates. The above comparison of various aspects serves only as your orientation and therefore in no way replaces expert advice.