VAT Exemption & Zero-Rated VAT in UAE
Expert guidance on VAT exemptions and zero-rated supplies — helping UAE businesses stay compliant, minimise tax liability, and maximise VAT recovery.
Zero-Rated vs Exempt — Key Differences
Zero-Rated VAT
- VAT is charged at 0% on sales
- Business must still register for VAT if turnover exceeds AED 375,000
- Input VAT on related purchases can be recovered
- VAT return must still be filed
VAT Exempt
- No VAT is charged on sales
- Exempt supplies do not count toward the AED 375,000 registration threshold
- Input VAT on related purchases cannot be recovered
- May still need to file if making mixed supplies
Zero-Rated Goods & Services in UAE
Exports
Goods and services exported outside the UAE are zero-rated, keeping UAE exporters competitive in international markets.
Basic Food Items
Essential food staples — bread, rice, milk, vegetables, and other necessities defined by the UAE government.
Healthcare
Certain essential medical treatments, preventive healthcare services, and medical supplies are zero-rated.
Education
Tuition fees and related educational services at accredited institutions, along with related educational supplies.
New Residential Property
First sale of newly constructed residential properties within 3 years of completion is zero-rated.
International Transport
International passenger flights and cargo services are zero-rated, promoting UAE trade and travel.
VAT-Exempt Goods & Services in UAE
Financial Services
Loans, interest payments, life insurance, and certain investment services are exempt from VAT.
Residential Real Estate
Sales and leases of residential properties (not newly built) are VAT-exempt.
Certain Healthcare
Some healthcare services provided by licensed professionals may be exempt rather than zero-rated.
How We Can Help Your Business
Identify Your Classification
We review your products and services and determine whether they are standard-rated, zero-rated, or exempt under UAE VAT law.
Maximise VAT Recovery
For zero-rated supplies, we ensure you claim all eligible input VAT on purchases to optimise your cash flow.
Ensure Full Compliance
We keep your business compliant with FTA regulations, avoiding penalties and audits related to incorrect VAT treatment.
Frequently Asked Questions
Zero-rated means 0% VAT is charged but you can still recover input VAT on related purchases. Exempt means no VAT is charged but you cannot recover input VAT on related costs.
Yes, if your taxable turnover (including zero-rated supplies) exceeds AED 375,000 you must register. However, you may apply to the FTA for an exception from registration if all your supplies are zero-rated.
No. Only basic food staples as defined by the UAE government are zero-rated. Processed foods, restaurant meals, and luxury food items are subject to the standard 5% VAT rate.
Yes. Businesses with mixed supplies must apportion their input VAT recovery between taxable (including zero-rated) and exempt activities. Our team handles this calculation for you.
Contact us for a free consultation. Our VAT specialists will review your business activities and advise the correct VAT treatment under UAE Federal Decree-Law No. 8 of 2017.
Not sure if your supplies are zero-rated or exempt?
Get a free consultation from our FTA-registered VAT specialists in Dubai.
