Tax rate by region United Arab Emirates

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The information provided on this page is intended for general informative purposes only. It should not be interpreted as tax advice, nor is it meant to be. For advice on your particular tax responsibilities, consult with an experienced tax expert. PayPro Global does not assume any responsibility for any action taken or not taken based on the information presented here.

UAE SaaS VAT: A Complete Overview

United Arab Emirates has implemented a Value Added Tax (VAT) system, which applies to the sale of SaaS products and services. The standard VAT rate in the UAE is 5.0%. In 2018, the UAE adopted a VAT system as part of a broader economic diversification strategy. The primary objectives of the VAT system include generating new revenue streams for the government, reducing dependence on oil and gas, and enhancing the UAE’s competitiveness in the global marketplace.

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United Arab Emirates

United Arab Emirates adopted a VAT system in 2018 to diversify its economy and improve public finances.

Official government link: Federal Tax Authority

5.00%

E-products and services VAT/Sales tax rate

Reduced tax rate product categories

Certain educational services for government-owned nurseries, preschools, schools, and higher educational institutions are zero rated

Exempted product categories

Some educational services may be exempt

Reverse charge mechanism for B2B sales

Yes

Tax ID validation required

Yes

When do you have to register

Registration must be done before the first sale

Online registration possible

Yes

Local representative needed

Yes

Registration procedure

To submit the registration application online, you need to create an account on the portal, complete a questionnaire, and attach the required documents.

List of digital and electronic services liable for tax

Provision of domain name services, web hosting, and remote maintenance of software and equipment.
Supply and updating of software.
Access to electronically provided images, text, and information, including photos, screensavers, e-books, and other electronic documents and files.
On-demand supply of music, movies, and games.
Provision of e-magazines.
Supply of advertising space on websites and associated rights.
Access to political, cultural, artistic, sporting, scientific, educational, or entertainment broadcasts, including event broadcasts.
Live streaming over the Internet.
Distance learning services.
Similar services with equivalent purposes and functions.

Penalties

A 2% penalty applies to any unpaid tax amount. Additionally, a 4% monthly penalty is charged starting one month after the original due date, and continues on the same date each month thereafter.

Registration threshold

No threshold, non-resident companies must register for VAT

Filing interval

Quarterly 

Filing deadline

Within 28 days after the end of the tax period

E-invoicing requirements

Mandatory from 1 Jan 2027 for businesses with revenue equal to or greater than AED 50M

Record keeping

All records must be maintained for at least 5 years. This includes annual accounts and any additional information needed to verify entries. You should keep general ledgers, purchase day books, issued and received invoices and credit notes, VAT ledgers, VAT calculations, adjustments, and records of supplies, exports, and imports. These documents must be readily available for presentation to the FTA in case of a VAT audit.

How-To Guides: United Arab Emirates SaaS VAT

Step: 1 Threshold

Effective January 1, 2018, the UAE require non-resident vendors of digital services to consumers (B2C) in the UAE to register for and collect VAT, regardless of the sales amount.

• Non-Residents: Non-resident businesses must register for VAT if they make taxable supplies in the UAE where VAT is not accounted for under the reverse charge mechanism (e.g., B2C supplies). No minimum threshold applies in such cases.
• Residents: AED 375,000 (Mandatory) / AED 187,500 (Voluntary).

Step: 2 Business Registration

Register online via the Federal Tax Authority (FTA) portal known as EmaraTax.

Step: 3 Obtain TIN

Upon approval, you will be issued a 15-digit Tax Registration Number (TRN).

Step: 1 Standard VAT Rate

Apply the standard VAT rate of 5%.

Step: 2 VAT Formula

To calculate your tax amount, use the following formula:

 

VAT Amount = Net Price x 5%

Step: 3 Reverse Charge (B2B)

Yes. For B2B sales to a UAE VAT-registered recipient, the Reverse Charge Mechanism applies. The non-resident supplier does not charge VAT. The UAE buyer accounts for the VAT on their own return (both as input and output tax).

Step: 1 Selling B2C

You must charge 5% VAT on all digital services provided to consumers (non-registrants) in the UAE. You are liable to collect and remit this tax.

Step: 2 Selling B2B

• Registered Buyer: Do not charge VAT. Obtain the buyer’s TRN to prove they are responsible for the Reverse Charge.

• Unregistered Buyer: Treat as a B2C sale and charge 5% VAT.

Step: 3 Invoice Requirements

A full “Tax Invoice” must include:

• The words “Tax Invoice” clearly displayed
• Supplier Name, Address & TRN
• Customer Name, Address & TRN (for B2B)
• Invoice Date & Number (Sequential)
• Description of Services
• Net Amount, VAT Rate (5%), and VAT Amount (in AED)

• Note: If the invoice is in a foreign currency, the Tax Amount must be converted to AED using the Central Bank exchange rate.

Step: 1 Filing Interval

VAT returns are typically filed Quarterly (unless assigned a monthly period by the FTA).

Step: 2 Filing Deadline

Returns and payments must be submitted by the 28th day of the month following the end of the tax period (e.g., April 28 for the Q1 period ending March 31).

Step: 3 Submission

File the VAT 201 Return online via the EmaraTax portal. Payments are made via GIBAN (Generated International Bank Account Number) or eDirham/credit card.

Step: 4 Record Keeping

Maintain records for a minimum of 5 years (Real estate records require 15 years).

PayPro Global Solution: Simplified Registration & Fiscal Representation

Navigating United Arab Emirates’ VAT registration and fiscal representation can be daunting. PayPro Global acts as your Merchant of Record, handling these complexities, including VAT registration and fiscal representation where needed, so you can focus on your business.

Learn more about our MoR services.

FAQ

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