Invoicing

VAT treatments explained

Updated 31 May 20264 min read

Why VAT treatment matters

Every line item on a UAE Peppol invoice must declare a VAT treatment. This determines how VAT is calculated and reported, and affects your VAT return filing with the FTA.

Wazeh360 validates your VAT treatment selections against FTA PINT AE rules before transmission.

Standard (5%)

Used for the vast majority of taxable supplies in the UAE. VAT is calculated at 5% of the line value.

Examples: Professional services, software, consulting, most goods

Zero-rated (0%)

Applies to specific supplies that are taxable under UAE VAT law, but at a 0% rate. You can still reclaim input VAT on expenses related to zero-rated supplies.

Examples:

Exports outside the GCC
International transport
Certain food items
Precious metals (in specific forms)

Exempt

Exempt supplies are not subject to UAE VAT at all. Unlike zero-rated, you cannot reclaim input VAT on costs related to making exempt supplies.

Examples:

Bare land
Local passenger transport
Certain financial services

Out of scope

Used for supplies that fall entirely outside the scope of UAE VAT — typically transactions not made in the course of business or outside UAE territorial scope.

When to use: Salaries, inter-company recharges with no supply, donations

Choosing the right treatment

If you are unsure which treatment applies to a particular supply, consult your UAE VAT advisor. Incorrect VAT treatment can result in FTA penalties.

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