VAT Exemptions and Zero-Rated Supplies in UAE

While VAT applies to most transactions, not all goods and services in the UAE are taxed equally. The law distinguishes between exempt and zero-rated supplies, which often confuses businesses. Knowing the difference is critical to applying VAT correctly and avoiding errors in filing.

Key Takeaways:

∙ Zero-rated (0% VAT): Exports, international transport, some healthcare and education
services
∙ Exempt (no VAT charged): Residential property leases, local passenger transport,
certain financial services
∙ Zero-rated suppliers can still claim input VAT, exempt suppliers cannot
∙ Misclassification can lead to penalties during audits

Understanding exemptions and zero-rated categories ensures correct pricing, invoicing, and compliance. Businesses must carefully evaluate their supplies and maintain proper documentation to support their VAT treatment. By classifying supplies accurately, companies not only avoid penalties but also strengthen their credibility with customers and authorities.