27 Dec 2025

What Is the Current VAT Rate in the UAE?

Introduction: What Is the Current VAT Rate in the UAE and Why Does It Matter?

What is the current VAT rate in the UAE? The standard VAT rate is 5% on most taxable goods and services.

This question matters because the VAT rate directly affects your pricing, invoices, cash flow, and VAT return filings with the Federal Tax Authority (FTA). If you run a business in Dubai, Abu Dhabi, Sharjah, or a UAE free zone, knowing the current VAT rate in the UAE helps you avoid simple mistakes that can turn into costly compliance issues.

In this article, you will learn what the current VAT rate in the UAE is, what “0% VAT” means, what “exempt” means, and how businesses should apply VAT correctly in real-life situations.

Need help applying VAT properly to your invoices and bookkeeping? Contact TAXESMAN today.

What Is the Current VAT Rate in the UAE Today?

The answer is straightforward. The current VAT rate in the UAE is 5% as the standard rate for most goods and services.

This 5% standard rate is what most UAE businesses apply when selling taxable goods or services and issuing VAT-compliant tax invoices.

If you want to confirm whether your sales are standard-rated, TAXESMAN can review your business activity and guide you clearly.

Does the UAE Only Have One VAT Rate?

Standard Rate vs Zero Rate vs Exempt

When people ask, “What is the current VAT rate in the UAE?”, they usually mean the standard rate of 5%. However, in practice, UAE VAT falls into three main treatments:

Standard-rated (5%)

Applies to most goods and services sold in the UAE.

Zero-rated (0%)

Certain categories are taxable at 0%. VAT is still applied, but at a 0% rate, and input VAT recovery is usually allowed.

Exempt supplies

Some supplies are exempt from VAT. No VAT is charged, and input VAT recovery rules can be restricted.

These distinctions matter greatly for VAT returns and input VAT recovery, especially if your business has mixed activities.

Want a clean VAT setup that matches your business activity? TAXESMAN can help you structure it properly.

When Should You Charge 5% VAT in the UAE?

The Practical Rule Most SMEs Use

For most SMEs, startups, and freelancers, the practical rule is simple:

If you are VAT registered and you are selling taxable goods or services in the UAE, you generally charge 5% VAT on your invoices.

This VAT is then reported and paid through your VAT return to the FTA.

If you are unsure whether a specific invoice should include 5% VAT or be treated as zero-rated, TAXESMAN can review your invoicing before you file.

What Is the Current VAT Rate in the UAE for Free Zones?

A Common Misunderstanding for New Founders

Many founders assume that being in a free zone means “no VAT.” In reality, the current VAT rate in the UAE remains 5% as the standard rate, and VAT treatment depends on what you sell, who you sell to, and how the supply is classified.

This is why free zone businesses still need to consider:

• VAT registration thresholds

• VAT-compliant invoicing

• VAT return filings

• Record keeping for FTA requirements

If you operate in a free zone and want clarity fast, TAXESMAN can help you understand your VAT position.

Real Examples in Dubai, Abu Dhabi, Sharjah, and Free Zones

Example 1: French Consultant in Dubai (Services)

A French expatriate runs a consulting business in Dubai and becomes VAT registered. Invoices issued to local clients are typically standard-rated, meaning the VAT charged on the invoice is usually 5%.

Need help setting up compliant invoicing templates and bookkeeping? Contact TAXESMAN today.

Example 2: E-commerce Seller in Sharjah (Goods)

A Sharjah-based online seller imports products and sells locally. Most standard sales in the UAE are subject to the standard VAT rate, which is currently 5%.

If you want VAT returns handled without stress, TAXESMAN is here to help.

Example 3: Abu Dhabi Free Zone Startup (Mixed Supplies)

A startup in an Abu Dhabi free zone sells both local services and exports. Depending on the transaction, they may have a mix of standard-rated (5%) and zero-rated (0%) supplies.

This is where accurate bookkeeping and correct VAT mapping make a major difference. TAXESMAN can support you end to end.

Has the UAE VAT Rate Changed, and Could It Change in the Future?

As of the most recent official guidance, the standard VAT rate in the UAE remains 5%.

While VAT procedures and compliance rules may be updated over time, the standard rate itself has remained stable since introduction. Staying informed and keeping your VAT processes up to date is essential.

If you want to stay on the safe side, TAXESMAN can help keep your VAT compliance aligned with current UAE requirements.

Conclusion: What Is the Current VAT Rate in the UAE?

To recap, the current VAT rate in the UAE is 5% as the standard rate. Some supplies may be treated as zero-rated (0%) or exempt, depending on their nature and the conditions applied.

If you want to apply VAT correctly, file accurate VAT returns, and keep your bookkeeping clean for the FTA, TAXESMAN can handle it for you.

Do not take chances with VAT compliance. Contact TAXESMAN today and keep your UAE VAT journey simple and organized.