Free · Cortex VAT · UAE rules as at 1 October 2026
Find out if you have to register, whether registering pays, and what your next return looks like. Built for owners who have never filed before. Nothing you type leaves your browser.
01 · Start here
Read this once. It takes four minutes and covers what accountants charge AED 500 a quarter to explain. Each step opens the tool that does the work.
VAT is 5% on most sales in the UAE. Whether you must collect it depends on one figure: your taxable sales over the last 12 months, counted on a rolling basis, not your financial year. Above AED 375,000 you must register. Above AED 187,500 you may register if you want to. Below that, you cannot.
If you are not registered, the VAT your suppliers charge you is a cost. Nobody refunds it. Registering lets you claim it back, but you then add 5% to your own prices and stay registered for at least 12 months. For a business selling to other companies this is nearly free money. For a shop selling to the public it often is not.
Registration is free and online at the Federal Tax Authority's EmaraTax portal. Have your trade licence, the Emirates ID or passport of the owner or signatory, the bank letter with your IBAN, and proof of turnover such as invoices or a signed declaration. Once you cross AED 375,000 you have 30 days to apply. The FTA issues a 15-digit Tax Registration Number, your TRN, and tells you your tax period and first filing date.
From your registration date every standard-rated sale carries 5% VAT and a tax invoice with your TRN on it. Sales to consumers, and sales to businesses up to AED 10,000, can use a simplified invoice: the words "Tax Invoice", your name, address and TRN, the date, what was sold, the total with VAT and the VAT amount. Shelf and menu prices must include VAT. The invoice must go out within 14 days of the sale.
You can only claim back VAT on a purchase if you hold a valid tax invoice showing the supplier's TRN. A receipt with no TRN is worth nothing to you. Some costs can never be claimed, even with a perfect invoice: client entertainment, cars available for personal use, and most personal benefits for staff. Keep all records for 5 years.
Most businesses file a VAT 201 return every three months, within 28 days of the quarter ending, and pay any VAT due in the same window. The return is simple arithmetic: VAT you collected on sales, minus VAT you paid on purchases. If the result is negative the FTA owes you, and the credit carries forward or can be refunded. A quarter with no sales still needs a nil return.
The penalty rules changed on 14 April 2026 and most websites still show the old, harsher figures. Today: a late return is AED 1,000 the first time, late payment runs at 14% a year, an incorrect return is AED 500, and correcting your own mistake early costs 1% a month on the difference. Waiting for the FTA to find it costs 15% plus the monthly rate.
02 · Registration check
The FTA tests a rolling 12 months, not your financial year, and also looks 30 days ahead. Enter figures without VAT, in dirhams.
03 · Break-even
Between AED 187,500 and AED 375,000, registering is your choice. This works out what that choice is worth in cash over a year.
What many owners believe
"I'm below AED 375,000, so the FTA will refund the AED 10,000 of VAT I paid my suppliers."
How it works
An unregistered business has no VAT account and files no return, so it has no way to claim anything back. That AED 10,000 is a cost, like rent. The only route to recovering it is registering, and from then on you charge 5% on your own sales.
04 · Return builder
Add your sales and purchase lines. Cortex sorts each one, checks it against the FTA's rules and fills the fourteen boxes. You review the result and submit it yourself on EmaraTax.
Your files are read inside this page and never uploaded. Close the tab and they are gone.
Send Cortex your purchase and sales invoices as PDFs or photos. We read them, build the worksheet above, flag what the FTA would question, and return it for your review within one business day. A registered tax agent partner signs off before anything is filed.
Ask about Cortex VAT ProQuoted per quarter after we see the volume. You remain the taxable person and submit on EmaraTax yourself, or through a registered tax agent.
05 · Rules by sector
The rate is only half of it. What decides your cash is whether a sale is zero-rated, where you still reclaim VAT on costs, or exempt, where you do not.
| Category | VAT on your sales | VAT on your costs | Counts toward AED 375,000 |
|---|---|---|---|
| 5% Standard-rated | Charge 5% | Reclaim it | Yes |
| 0% Zero-rated | Charge 0% | Reclaim it | Yes |
| Exempt | Charge nothing | Cannot reclaim | No |
| Out of scope | Not a UAE supply | Generally not | No |
06 · Deadlines and penalties
Penalties below are the regime in force since 14 April 2026 under Cabinet Decision No. 129 of 2025. Many websites still quote the older, harsher figures.
| Violation | Penalty |
|---|---|
| Late registration | AED 10,000 |
| Late return, first time | AED 1,000 |
| Late return, repeat within 24 months | AED 2,000 |
| Late payment | 14% a year |
| Incorrect return | AED 500 |
| Voluntary disclosure of an error | 1% a month |
| Error found by FTA audit first | 15% + 1% a month |
| Records not kept | AED 10,000 |
| Tax invoice not issued, per case | AED 2,500 |
| Prices shown without VAT | AED 5,000 |
| Late deregistration | AED 1,000/month, max 10,000 |
| Obstructing a tax auditor | AED 20,000 |
From 1 January 2027 for businesses with revenue of AED 50 million or more, and from 1 July 2027 for everyone else, business-to-business and business-to-government invoices must travel as structured PINT AE files through a Ministry-accredited service provider. A PDF will no longer count as a tax invoice for those sales. Smaller businesses must appoint a provider by 31 March 2027. Sales to consumers are outside the mandate for now.
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