Tax, VAT & E-Invoicing in UAE
Understanding the applicability limits and thresholds under UAE tax laws is essential for accurate compliance and planning. Below is a detailed explanation of the key limits that apply to businesses operating in Dubai and across the UAE.
Corporate Tax Limits in Dubai & UAE
- UAE Corporate Tax applies to taxable business profits, not total revenue.
- The current corporate tax rate is 9% on taxable profits exceeding the exemption limit.
Corporate Tax Threshold
- 0% Corporate Tax:
- Applies on taxable profits up to AED 375,000
- 9% Corporate Tax:
- Applies on taxable profits above AED 375,000
Applicability Notes
- Businesses must still register for corporate tax, even if profits are below the threshold.
- Free zone entities may qualify for preferential tax treatment, subject to:
- -Meeting qualifying conditions
- -Maintaining substance and compliance
- -Filing required returns and documentation
VAT Limits in Dubai & UAE
VAT in the UAE is governed by turnover-based thresholds.
Mandatory VAT Registration Limit
– Businesses must register for VAT if taxable supplies exceed AED 375,000 in the last 12 months or are expected to exceed it in the next 30 days.
Voluntary VAT Registration Limit
– Businesses may opt for voluntary VAT registration if:
– Taxable supplies or expenses exceed AED 187,500
VAT Rate
– Standard VAT rate in the UAE is 5%.
Applicability Notes
– VAT applies to most goods and services unless specifically exempt or zero-rated.
– Registered businesses must:
-File VAT returns on time
– Maintain proper tax invoices and records
– Comply with FTA audit and documentation requirements
E-Invoicing Limits in UAE & Dubai
– Currently, there is no turnover or profit threshold for adopting e-invoicing in the UAE.
– E-invoicing is being introduced in phases, and applicability will be expanded gradually.
Key Points on E-Invoicing
– While not yet mandatory for all businesses, early adoption is strongly encouraged.
– E-invoicing applies regardless of:
-Business size
-Revenue limits
-VAT registration status (once mandated)
Why Prepare Early?
– Avoid last-minute system changes
– Ensure seamless VAT compliance
– Improve audit readiness and data accuracy
– Align with future Federal Tax Authority (FTA) digital requirements
Why Understanding These Limits Matters
– Ensures correct tax registration and filing
– Prevents penalties and compliance risks
– Supports accurate financial and tax planning
– Helps businesses prepare for future regulatory changes
