VAT vs Corporate Tax in the UAE: What Your Business Needs to Know

Many business owners in the UAE confuse VAT and Corporate Tax. They are two different taxes, with different rules, deadlines and returns. Here is a simple guide.

VAT (Value Added Tax)

• What it is: a tax on the supply of most goods and services.

• Standard rate: 5%.

• Who must register: businesses whose taxable supplies and imports exceed AED 375,000 in the past 12 months, or are expected to exceed it in the next 30 days. Businesses above AED 187,500 can choose to register voluntarily.

• Returns: usually filed quarterly (some businesses file monthly), and generally due within 28 days after the end of each tax period.

Corporate Tax

• What it is: a tax on the taxable profit of a business.

• Rates: 0% on taxable income up to AED 375,000, and 9% on taxable income above AED 375,000.

• Who must register: all taxable persons must register with the FTA, even if no tax is payable.

• Returns: generally due within 9 months after the end of your financial year.

Small Business Relief

Eligible resident businesses with revenue of AED 3 million or less can elect Small Business Relief and be treated as having no taxable income. This relief has been extended to cover tax periods ending on or before 31 December 2029. It is not automatic: it must be elected in your Corporate Tax return.

Key differences at a glance

• VAT is charged on sales; Corporate Tax is charged on profit.

• VAT returns are filed every quarter or month; the Corporate Tax return is filed once a year.

• Being VAT registered does not replace Corporate Tax registration. Most businesses need both.

How Benfy Group can help

From VAT and Corporate Tax registration to return filing and ongoing compliance, our team makes sure your business meets every requirement on time and avoids penalties.

Talk to our team today.

📞 +971 55 360 0404 | ✉️ info@benfygroup.com