Introduction
If you’re a UK entrepreneur or expat planning to do business in the UAE, understanding VAT in Dubai is essential in 2025. While the region is known for its tax-free lifestyle, the UAE does apply a consumption tax — Value Added Tax (VAT) — which affects businesses and services.
This guide breaks down how Dubai’s VAT system works, who needs to register, how it compares to the UK tax system, and how to stay compliant as a business owner or freelancer.
What is VAT in Dubai?
Value Added Tax (VAT) is an indirect tax applied to the consumption of goods and services. VAT in Dubai was introduced in January 2018 at a flat rate of 5% and is governed by the UAE’s Federal Tax Authority (FTA).
It is charged at each stage of the supply chain and ultimately borne by the end consumer — similar to VAT in the UK, but with a significantly lower rate.
VAT Rate in Dubai for 2025
As of 2025, the standard VAT rate in Dubai remains at 5%, one of the lowest globally.
VAT applies to:
- Most goods and services
- Professional and business services
- Utility bills and telecoms
VAT exemptions:
- Certain healthcare and educational services
- Some financial services
- First sale of residential property (under specific rules)
0% VAT applies to:
- Exports of goods and services outside the GCC
- Certain international transport services
This flat and predictable VAT system makes Dubai tax compliance straightforward for businesses.
Who Needs to Register for VAT?
Businesses and individuals doing business in the UAE may be required to register for VAT depending on their turnover and service type.
VAT Registration Thresholds:
- Mandatory Registration: AED 375,000+ in taxable revenue
- Voluntary Registration: AED 187,500–375,000
Who should register?
- UAE-based businesses and consultancies
- E-commerce platforms selling to UAE residents
- Foreign businesses offering digital or professional services within the UAE
If you meet these thresholds, you must register with the Federal Tax Authority (FTA) and stay compliant with all Dubai tax rules.
Filing VAT Returns in Dubai
Once registered, businesses must file VAT returns quarterly through the FTA’s online portal.
Filing Requirements:
- Maintain proper tax invoices and receipts
- Submit credit notes, if any
- File returns within 28 days after the tax period ends
Penalties:
- Late filing: AED 1,000 for the first offense, AED 2,000 for repeat offenses
- Incorrect filing: Additional administrative fines may apply
Proper record-keeping is essential to avoid these penalties — especially for UK entrepreneurs new to Dubai’s tax system.
Dubai VAT vs UK Tax System
If you’re used to the UK tax system, Dubai’s simplified structure can be a breath of fresh air.
| Tax Aspect | UK | Dubai |
|---|---|---|
| VAT | 20% (standard rate) | 5% flat rate |
| Income Tax | Up to 45% | 0% |
| Corporate Tax | 19%–25% | 9% (only above AED 375K) |
As a UK expat, you benefit from no income tax and a dramatically lower VAT rate — giving you more room to reinvest in your business or personal finances.
How Set Hub Helps with VAT & Tax Setup
Navigating VAT in a new country can be confusing — especially when it impacts your licensing, pricing, and operational setup.
At Set Hub, we assist UK expats and entrepreneurs with:
- ✅ VAT registration and filing support
- ✅ Bookkeeping and invoice compliance
- ✅ Business setup in Dubai, Free Zones or Mainland
- ✅ Consultation on tax obligations for foreign service providers and freelancers
With our UK-focused advisory team, you get tailored support that bridges both the UK tax expectations and Dubai tax compliance.
👉 Contact Set Hub today for a free consultation.
Conclusion & Call to Action
Dubai offers an incredibly competitive tax environment, and VAT in Dubai is the key tax business owners need to understand and manage well.
With no income tax, no capital gains tax, and only a 5% VAT rate, the UAE remains one of the most entrepreneur-friendly destinations for UK expats.
Ready to register your business and stay compliant with VAT?
Contact Set Hub today for personalized support on tax, licensing, and company formation.
