Value Added Tax (VAT)
The United Arab Emirates (UAE) is known for its robust economy, driven by various industries. Value Added Tax was introduced in the UAE and is applicable with effect from 1st January 2018. VAT is a transaction-based indirect tax which is levied at each step of the supply chain. End consumers generally bear the VAT cost while registered businesses collect and account for the tax, in a way acting as a tax collector on behalf of the Federal Tax Authority. Hence, it is very important for every taxable person to be aware of the provisions of VAT Law applicable to its business / industry.
The Federal Decree Law No. 8 of 2017, also known as the “VAT Law”, was issued on August 9, 2017. The law applies to all taxable persons, resident or non-resident, who:
- make a Taxable or Deemed supply,
- import Concerned Goods & Services, and
- make a taxable supply of crude or refined oil, unprocessed or processed natural gas, or Pure Hydrocarbons in the State.
At Sun Management Group, we manage the full VAT cycle for businesses of every size, so compliance is accurate, input tax recovery is maximised, and audit risk stays low.
Our Engagement Process
Assess
Comply
Appeal
Advise
Support
Review
How VAT Applies to Your Business
| Supply Type | VAT Rate | What This Means | Common Examples |
|---|---|---|---|
|
Standard Rated |
5% |
VAT is charged and input tax on related costs is recoverable |
Most goods and services supplied in the UAE |
|
Zero-Rated |
0% |
VAT is charged at 0% but input tax on related costs is still recoverable |
Exports, international transport, certain healthcare, means of transport and precious metals |
|
Exempt |
Exempt |
No VAT charged and input tax on related costs is generally not recoverable |
Residential property rental, bare land, local passenger transport, margin-based financial services |
|
Out of Scope |
N/A |
Falls outside the UAE VAT system entirely (no VAT obligations arise) |
Supplies made entirely outside the UAE, third port shipments, electronic services used and enjoyed outside the UAE |
|
Deemed Supplies |
5% / 0% |
Treated as taxable even where no consideration is received |
Business assets transferred without payment, certain related-party supplies |
Our VAT Services
Impact Assessment & Private Clarifications
VAT Compliance - Registration, Filing, Voluntary Disclosure, Refund Claims & Deregistration
VAT Advisory
VAT Reconsideration & Appeals
VAT Health Check & Return Review Analysis
FTA Audit Support
Impact Assessment & Private Clarifications
Before you can manage VAT well, you need a clear picture of where you stand. Our VAT Impact Assessment gives you exactly that, a structured diagnostic of your business operations, supply chain, and systems, mapped against UAE VAT law to identify what applies to you, where risk sits, and what needs to change.
Our impact assessment covers:
Review of business model, revenue streams & supply chain structure
Assessment of accounting systems, ERP configuration & invoicing flows
VAT registration requirement determination, mandatory or voluntary
Input tax recovery entitlement & restriction analysis
Identification of VAT leakage areas & transaction-level risk
Clear compliance roadmap with prioritised recommendations
Seeking private clarifications from the FTA in cases of uncertainty regarding tax classification
VAT Advisory
VAT isn’t one-size-fits-all. Industry-specific rules, cross-border transactions, group structures, and mixed supplies all create nuance that generic guidance doesn’t cover. Our advisory service tackles the difficult questions so you apply the right VAT treatment, first time.
Our advisory support includes:
Partial Exemption & Input Tax Recovery: pro-rata apportionment calculations and methodology design for businesses with mixed standard-rated and exempt supplies
VAT Grouping: eligibility assessment, benefits and risk analysis, and ongoing compliance guidance for group VAT registration structures
Place of Supply Rules: cross-border transaction analysis to determine the correct VAT treatment for internationally supplied goods and services
Reverse Charge Mechanism: advisory on imported services, ensuring correct self-accounting of VAT and avoiding double taxation or penalty exposure
VAT Compliance - Registration, Filing, Voluntary Disclosure, Refund Claims & Deregistration
We manage the full VAT compliance cycle, from initial registration through to monthly or quarterly return filing, reconciliations, and deregistration when needed. Every submission is prepared with care, reconciled against your accounting records, and submitted on time.
Registration & Amendments
VAT registration, amendment & deregistration applications
Coordination with ERP systems for accurate data extraction
Return Filing
Preparation & submission of monthly or quarterly VAT returns
Detailed input and output VAT reconciliations
Review of tax invoices, credit notes & supporting documentation
Ongoing compliance monitoring to reduce errors and penalty risk
Voluntary Disclosure
Identifying the errors made in past VAT returns
Assessing the need for rectifying the errors through Voluntary Disclosure
Preparing and submitting the Voluntary Disclosure
Refund Claims
With the 5-year limitation on claiming VAT refunds, we can assist with:
Preparing & collating the VAT refund working and documents in the required format
Timely follow-ups
Liaising with the FTA to prepare and submit additional information
FTA Audit Support
An FTA audit doesn’t have to be disruptive, if your documentation is in order and you have experienced advisors in your corner. We support businesses through the full audit lifecycle, from the initial information request through to resolution of disputed findings.
Our audit support includes:
Preparation & collation of required audit documentation
Structured responses to FTA information requests
Representation during audit discussions and meetings
Technical clarification of VAT positions adopted by the business
Resolution of disputed findings & reconciliation of differences
Post-audit action planning to address identified gaps
VAT Reconsideration & Appeals
FTA assessments, penalties, and adverse decisions are not always final. Where the outcome is unjust or legally unsound, there are formal channels to challenge it, and we’ve navigated them before. We represent businesses through every stage of the dispute resolution process, from initial reconsideration through to higher levels where necessary.
We support you with:
Preparation & submission of reconsideration applications to the FTA
Legal grounds analysis & supporting documentation preparation
Filing of appeals before the Tax Disputes Resolution Committee (TDRC)
Further escalation to Higher Courts where required
Strategic representation throughout the dispute resolution process
VAT Health Check & Return Review Analysis
Most VAT errors aren’t discovered during audits, they accumulate quietly over months of returns. A VAT Health Check is a proactive review of your compliance history, designed to catch and correct issues before they become a regulatory problem. We look at where you’ve been to make sure where you’re going is clean.
Our health check covers: