Over the last few years, the United Arab Emirates’ (UAE) tax system has been slowly brought up to date. One of the most important steps was the VAT that was put in place in 2018. It made the government less reliant on oil money. But since then, the Federal Tax Authority (FTA) has made a number of changes to the VAT system to keep it in line with international rules and the way business is done these days.
The most recent amendments to the UAE VAT Executive Regulations came into effect on 15 November 2024 under Cabinet Decision No. 100 of 2024, with clarifications issued by the FTA in March 2025. This article talks about those changes and what companies should know about them. By making these changes, the government aims to make things simpler, encourage compliance, and improve the VAT process. Lots of companies pick to work with skilled VAT consultants in Dubai to get the most out of these changes.
New changes have been made to the VAT Executive Regulations.
Limits on VAT registration
The FTA made it clear that businesses that make more than AED 375,000 in taxable sales each year need to sign up for VAT. Businesses that make between AED 187,500 and AED 375,000 a year can choose to register on their own.
Non-resident businesses, however, must register for VAT regardless of turnover if they make taxable supplies in the UAE and the reverse charge mechanism does not apply.
Supply Rules for the Whole
The new rules show how to handle offering more than one good or service at the same time.
If the supply is a single composite supply (one main item with related ancillary parts), it is treated as one transaction.
If the items are independent, they are treated separately.
VAT on online shopping
Non-resident providers of digital or electronic services must register for VAT in the UAE, regardless of the value of sales, if no UAE customer is responsible to account for VAT under the reverse charge.
Help with bad debt
If certain conditions are met, businesses can now get back VAT on goods that have been delivered but not paid for more than six months, provided the amount has been written off as a bad debt in the accounts.
Deals with real estate
- Residential buildings are generally exempt from VAT, except the first supply of a new residential building, which is zero-rated.
- Commercial property is subject to VAT, and input VAT can be recovered.
- Bare land supplies remain exempt.
Deposits that can be returned
As long as deposits are genuinely refundable and returned within an acceptable time, they are not subject to VAT.
If a deposit is kept or applied toward payment, VAT is due.
VAT Refunds for Tourists
Tourists can claim VAT refunds through the official Tourist Refund Scheme at airports and exit points. Purchases must be validated before departure; while online tools allow checking transactions, the refund itself is processed at the point of exit.
Fines and Following the Rules
Penalties apply for late reporting, false statements, or failing to register under the UAE Tax Procedures Law. Businesses are encouraged to correct errors promptly to reduce penalties.
In conclusion
The UAE’s businesses need to make sure they know about these new rules. It is important for your business to stay in line with the rules and avoid fines. Hiring professional VAT experts will help you do well in a tax world that is always changing.
There are still changes being made to the UAE VAT Executive Regulations, which shows that the government wants a fair and effective tax system. New rules like clearer real estate treatment, VAT on digital services, and composite supply guidance make it easier for businesses to follow the rules and remain accountable.
