Understanding VAT in the UAE: Standard, Zero-Rated, and Exempt Categories Explained

• UAE VAT has three main categories: Standard Rate (5%), Zero-Rated (0%), and Exempt (no VAT).
• Standard Rate applies to most goods/services; businesses can reclaim input VAT.
• Zero-Rated supplies (e.g., exports, international transport, first residential supply, select healthcare/education) are taxed at 0% but allow input VAT recovery with strict compliance.
• Exempt supplies (e.g., most financial services, residential rent/sale after initial supply, bare land, local transport) have no VAT and do not allow input VAT recovery, leading to hidden costs.
• Businesses must manage pricing, cash flow, documentation, and accounting carefully to ensure compliance and optimize VAT recovery.

Source: fiscal-requirements.com

Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.

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