General
Jan 13, 2025
As a freelancer in the UAE, understanding Value Added Tax (VAT) is crucial for staying compliant with the government and ensuring your business runs smoothly. VAT is a consumption tax applied to the sale of goods and services, and the UAE introduced it in January 2018 at a rate of 5%. Knowing how VAT works can help you avoid penalties, streamline your financial processes, and grow your business with confidence.
Do you need to Register?
In the UAE, whether you need to register for VAT depends on your income. If your taxable supplies exceed AED 375,000 annually, VAT registration is mandatory.
For incomes between AED 187,500 and AED 375,000, registration is voluntary, allowing you to claim VAT on expenses and enhance your business credibility.
If your income is below AED 187,500, registration isn't required. However, it’s important to monitor your earnings and stay updated on any VAT changes that could affect your business.
Why Register for VAT?
Registering for VAT offers several advantages for freelancers, helping your business grow and stay on the right side of the law.

Boost Credibility with Clients
When you're VAT-registered, clients perceive your business as more professional and established. This can help you attract larger clients and compete more effectively in a crowded market. Many companies, especially larger ones, prefer working with VAT-registered freelancers because it streamlines their own VAT accounting processes.
Recover VAT on Business Expenses
One of the key benefits of being VAT-registered is the ability to reclaim VAT paid on business-related expenses, such as office supplies, software subscriptions, and travel costs. This can lower your overall expenses and improve your cash flow, which is essential for growing your business. By deducting VAT on these costs, you ensure that your business is more cost-efficient and financially sustainable.
Stay Compliant with UAE Laws
VAT registration ensures you're in full compliance with UAE tax laws, reducing the risk of fines or penalties for non-compliance. The UAE tax authorities take VAT seriously, and being registered helps you avoid potential legal issues. It also helps you stay updated on any changes in tax laws, making it easier to adapt and manage your finances accordingly.
Charging VAT to Clients
Add 5% VAT to Your Invoices
As a VAT-registered freelancer, you must charge a 5% VAT on all taxable services. This should be clearly shown on your invoices, added to the base price.
Include Your Tax Registration Number (TRN)
Always include your Tax Registration Number (TRN) on invoices. This ensures clients can properly account for the VAT and confirms your compliance with UAE tax regulations.
Filing VAT Returns

File Returns Quarterly on the FTA Portal
VAT returns must be filed every quarter through the Federal Tax Authority (FTA) portal. This ensures you report the VAT you've collected and paid, maintaining compliance with UAE tax laws. Access the portal here.
Keep Detailed Records of Income and Expenses
Maintaining accurate records of all income and expenses is essential. These records support your VAT filings and help calculate the VAT you owe or can reclaim.
Get a Refund on Your VAT if Your Expenses Are Higher Than Your Income
If you've paid more VAT on business expenses than you've collected from clients, you can apply for a refund from the FTA. This process helps maintain cash flow and ensures you're not at a financial disadvantage.
Key Takeaways
Avoid Penalties by Staying Compliant
Staying on top of your VAT obligations is essential to avoid penalties. Ensure you file your returns on time, charge VAT correctly, and maintain accurate records. This helps keep your business running smoothly and legally.
Seek Professional Help if Needed
VAT can be complex, so don’t hesitate to consult with a tax professional if you need assistance. They can guide you through the registration, filing process, and help you make the most of any VAT benefits.