UAE Value Added Tax Glossary

Value Added Tax (VAT)

Independent examination of financial information to express an opinion on fairness, accuracy, and compliance with applicable reporting frameworks.

Federal Tax Authority (FTA)

UAE authority responsible for administration, collection, enforcement, and compliance of federal taxes including VAT and excise tax.

Taxable Supply

Supply of goods or services subject to VAT at standard or zero rate under UAE VAT Law.

Standard Rated Supply

Taxable supply subject to VAT at standard rate currently applied to most goods and services in UAE.

Zero Rated Supply

Taxable supply charged at zero percent VAT allowing recovery of input tax subject to conditions.

Exempt Supply

Supply not subject to VAT where input tax recovery is not permitted under UAE VAT Law.

Taxable Person

Any individual or business registered or required to register for VAT with the UAE Federal Tax Authority.

VAT Registration

The process of enrolling with the FTA to collect VAT on taxable supplies made within the UAE.

Mandatory Registration

VAT registration required when taxable supplies and imports exceed AED 375,000 annually.

Voluntary Registration

Optional VAT registration allowed when taxable supplies exceed AED 187,500 but remain below mandatory threshold.

Input Tax

VAT paid on purchases or expenses incurred by a VAT-registered business.

Output Tax

VAT charged by a registered business on taxable supplies made to customers.

Recoverable Input Tax

Input VAT that can be reclaimed from the FTA, subject to compliance with VAT rules.

Non-Recoverable Input Tax

Input VAT that cannot be reclaimed due to exemptions or restricted expenses.

VAT Return

Periodic declaration submitted to FTA summarizing output VAT, input VAT, and net VAT payable.

Tax Period

Specific period for which a VAT return must be submitted, usually monthly or quarterly.

VAT Payment

Settlement of net VAT liability with the FTA within the prescribed deadline.

VAT Refund

Process of reclaiming excess input VAT from the FTA when eligible.

Tax Invoice

Official document issued by registered suppliers detailing VAT charged on taxable supplies.

Simplified Tax Invoice

Invoice issued for supplies below AED 10,000 with limited mandatory VAT details.

Credit Note

Document issued to adjust or reduce VAT charged due to returns, discounts, or errors.

Debit Note

Document issued to increase VAT payable when additional charges arise after invoicing.

Place of Supply

Rules determining where a supply is deemed to occur for VAT purposes.

Date of Supply

Determines when VAT becomes chargeable, based on invoice date, payment, or delivery.

Reverse Charge Mechanism

VAT mechanism shifting tax liability from supplier to recipient, commonly for imported services.

Designated Zone

Special free zone treated as outside UAE for VAT purposes under specific conditions.

Free Zone

Geographical area with special tax regulations; VAT treatment depends on zone designation.

Import of Goods

Goods brought into the UAE from outside the GCC, subject to VAT at customs.

Export of Goods

Goods supplied outside the UAE, generally treated as zero-rated supplies.

Tax Group

Two or more related entities registered together as a single VAT taxable person.

VAT Deregistration

Process of cancelling VAT registration when a business ceases taxable activities.

Voluntary Deregistration

Optional cancellation of VAT registration when taxable supplies fall below threshold.

Mandatory Deregistration

Required VAT cancellation when business no longer meets registration criteria.

Tax Assessment

FTA determination of VAT liability when returns are incorrect or missing.

Administrative Penalty

Financial fine imposed by FTA for non-compliance with VAT regulations.

Late Filing Penalty

Penalty charged for failure to submit VAT returns within stipulated deadlines.

Late Payment Penalty

Penalty applied when VAT dues are not paid on time.

Tax Audit

FTA examination of records to verify VAT compliance and accuracy.

Voluntary Disclosure

Correction submitted to FTA to amend errors in previously filed VAT returns.

Record Keeping

Mandatory maintenance of VAT-related documents for minimum five years.

Tax Agent

FTA-approved professional authorized to represent businesses in VAT matters.

VAT Compliance

Adherence to UAE VAT laws, including registration, filing, payment, and documentation.

Economic Substance Regulations (ESR)

Rules ensuring UAE entities demonstrate genuine economic activities within the country.

Excise Tax

Indirect tax imposed on harmful goods like tobacco, sugary drinks, and energy beverages.

Input Apportionment

Method of calculating recoverable input VAT for businesses making mixed supplies.

Mixed Supplies

Business supplies that include taxable, zero-rated, and exempt transactions.

Partial Exemption

Restriction on input VAT recovery when a business makes exempt supplies.

VAT Certificate

Official document confirming a business’s VAT registration status.

Customs VAT

VAT charged on imported goods at UAE customs clearance.

Net VAT Payable

Difference between output VAT collected and recoverable input VAT.

Tax Invoice Number

Unique serial number used to identify VAT invoices for compliance purposes.

VAT Accounting

Process of recording VAT transactions accurately within accounting systems.

Cash Accounting Scheme

VAT accounting method where VAT is reported upon receipt or payment.

Accrual Accounting Scheme

VAT accounting method where VAT is reported based on invoice date.

VAT Consultant

Professional advisor assisting businesses with VAT registration, compliance, and planning.

VAT Advisory Services

Specialized services offering strategic guidance on VAT implications and risks.

VAT Planning

Structuring transactions efficiently to ensure compliance while optimizing VAT position.

Input VAT Adjustment

Correction made to previously claimed input VAT due to changes in usage.

Deemed Supply

Transaction treated as taxable supply even without consideration under VAT law.

Related Parties

Entities with common ownership or control affecting VAT grouping and pricing.

Consideration

Payment or value received for supply of goods or services under VAT rules.

Business Activity

Any ongoing economic activity conducted independently for income generation.

Taxable Import

Import of goods or services subject to VAT under UAE VAT legislation.

VAT Threshold

Specified turnover limit determining VAT registration eligibility or obligation.

FTA Portal

Online platform used for VAT registration, filing returns, and payments.

VAT Law

Federal Decree-Law governing VAT implementation and administration in the UAE.

Executive Regulations

Detailed rules issued to clarify implementation of UAE VAT Law.

VAT Liability

Amount of VAT payable or refundable to the FTA.

Compliance Review

Internal assessment to ensure VAT processes meet regulatory requirements.

Tax Residency

Determines VAT and tax obligations based on place of business establishment.

Permanent Establishment

Fixed place of business triggering VAT and corporate tax obligations.

Supply of Services

Provision of services subject to VAT depending on place of supply rules.

Supply of Goods

Transfer of ownership or right to use goods for consideration.

VAT Documentation

Invoices, contracts, and records required to support VAT transactions.

Tax Invoice Validation

Process of ensuring invoices meet FTA requirements for VAT recovery.

Input VAT Recovery

Claiming VAT paid on eligible business expenses.

VAT Exposure

Potential financial risk arising from incorrect VAT treatment.

VAT Health Check

Independent review identifying VAT compliance gaps and risks.

Tax Compliance Services

Professional services ensuring adherence to VAT and regulatory requirements.

Audit Support

Assistance provided during FTA audits and assessments.

VAT Filing Deadline

Last date for submitting VAT return to avoid penalties.

VAT Payment Deadline

Due date for remitting VAT liability to FTA.

Tax Penalty Waiver

FTA relief mechanism reducing penalties under specific conditions.

VAT Registration Number (TRN)

Unique tax identification number issued by FTA to registered entities.

E-Commerce VAT

VAT implications on online sales of goods and services.

Digital Services VAT

VAT treatment applicable to electronically supplied services.

Cross-Border Transactions

Transactions involving parties in different countries with specific VAT rules.

GCC VAT

VAT framework applicable across Gulf Cooperation Council member states.

Transitional Provisions

Rules governing VAT treatment during regulatory changes.

VAT Advisory Firm

Professional firm offering VAT, audit, and compliance solutions.

VAT Compliance Checklist

Structured list ensuring all VAT obligations are fulfilled.

VAT Risk Management

Identification and mitigation of VAT-related compliance risks.

VAT Policy

Internal guidelines outlining VAT treatment across business operations.

Tax Governance

Framework ensuring responsible and compliant tax management.

VAT Consultancy UAE

Professional VAT advisory services tailored to UAE regulations.

VAT Audit Readiness

Preparedness of records and systems for FTA audits.

VAT Implementation

Initial setup of VAT processes, systems, and registrations.

VAT Impact Assessment

Evaluation of VAT implications on business transactions.

VAT Compliance Outsourcing

Delegating VAT compliance functions to expert consultants.

VAT Advisory UAE

Specialized guidance for businesses navigating UAE VAT regulations.