How to Pay VAT in UAE: A Comprehensive Guide

Paying Value Added Tax (VAT) in the UAE is a mandatory process for businesses registered under the Federal Tax Authority (FTA). This guide will walk you through the necessary steps, payment methods, and key considerations to ensure compliance. By understanding the VAT payment process, businesses can avoid penalties and maintain smooth operations while meeting their legal obligations.

In the UAE, VAT is set at a standard rate of 5% and applies to most goods and services. Registered businesses are required to collect VAT from customers and remit it to the FTA within specified deadlines. The payment process has been streamlined through various online and banking methods, offering flexibility to businesses of all sizes.

This comprehensive guide breaks down the VAT payment process, explains common challenges, and provides practical solutions to simplify compliance.

Understanding VAT in the UAE

What is VAT?

Value Added Tax (VAT) is an indirect tax introduced in the UAE on January 1, 2018. It is applied on most goods and services, except for specific exempt or zero-rated categories. VAT aims to generate revenue for the government to support public services and infrastructure development. The standard VAT rate remains 5%, and the current registration thresholds of AED 375,000 (mandatory) and AED 187,500 (voluntary) continue to apply unless amended by FTA regulations.

Who needs to pay VAT?

VAT is mandatory for businesses that meet the following criteria:

• Annual taxable supplies and imports exceed AED 375,000 (mandatory registration threshold).
• Businesses below this threshold but exceeding AED 187,500 can opt for voluntary registration.

Registered businesses act as tax collectors, charging VAT on their supplies and paying VAT on their purchases. They must report the difference to the FTA through periodic VAT returns.

Key deadlines for VAT payment

VAT returns must be filed monthly or quarterly, as determined by the Federal Tax Authority for each registrant. The payment deadline is 28 days after the end of the tax period, unless FTA specifies otherwise in your tax registration or notifications.

Failure to meet these deadlines may result in fines and penalties. Businesses should mark their calendars and allocate sufficient time to calculate and pay VAT to avoid non-compliance.

VAT filing process in the UAE

Overview of the VAT filing process

The VAT filing process in the UAE requires businesses to report their taxable supplies, purchases, and the VAT amount collected or paid during a tax period. This information is submitted through the Federal Tax Authority’s online portal. File your VAT return and make payments exclusively through EmaraTax, the official digital tax platform of the Federal Tax Authority (FTA). 

Steps to file VAT returns online

1. Log in to the EmaraTax / FTA e‑Services portal using your UAE PASS or registered credentials.
2. Complete the VAT return form (VAT 201). Enter details of your taxable supplies, exempt supplies, and zero-rated supplies. Include input VAT paid on purchases and output VAT collected from sales.
3. Calculate net VAT payable or refundable. Determine the difference between input VAT and output VAT. If output VAT exceeds input VAT, you owe the FTA. If input VAT exceeds output VAT, you are eligible for a refund.
4. Review and submit. Double-check the accuracy of all entries to ensure they align with your records. Submit the form through the portal.
5. Make the payment. If you have a payable amount, proceed with the payment through one of the FTA’s approved methods before the deadline.

Common mistakes to avoid during VAT filing

• Incorrect classification of supplies. Ensure that zero-rated, exempt, and taxable supplies are categorized accurately.
• Omitting input VAT claims. Double-check that all eligible input VAT is included to reduce your VAT liability.
• Late filing. Submit returns and payments on time to avoid penalties.
• Data discrepancies. Ensure the figures in your VAT return match your accounting records to avoid audits and fines.

Methods of paying VAT in the UAE

Businesses in the UAE can choose from several convenient methods to pay VAT to the FTA. All VAT payments in the UAE are made through the EmaraTax / FTA e‑Services portal, in the section My Payments. From there you can view your outstanding liabilities, generate a GIBAN for bank transfers, choose payment methods, and track the status of each transaction.

Paying by bank card via FAB Magnati

You can pay your VAT liability by using a debit or credit card through the FAB Magnati payment gateway integrated into EmaraTax.

Advantages: instant processing in most cases and convenient online payment directly from your EmaraTax account.

Limitations: a service fee of 0.68% of the payment amount is charged by the payment processor (subject to change), and your card issuer may apply additional charges or limits. 

We recommend checking the latest fees displayed in EmaraTax at the time of payment, as charges may be updated by FTA or the payment provider.

How to use: log in to EmaraTax, go to My Payments, select the liability you want to pay, click Make Payment, choose Card payment (FAB Magnati), and follow the on‑screen instructions. e‑Dirham cards can be used as long as they are accepted by FAB Magnati and your issuing bank.

eDebit

eDebit allows you to pay VAT directly from your UAE bank account through the secure integration between EmaraTax and participating banks.

Advantages: secure and direct payment method with no need for physical interaction.

Limitations: eDebit is available only for customers of participating UAE banks, and the list of supported banks may change.

How to use: in My Payments in EmaraTax, choose eDebit as your payment method, select your bank, log in via the secure bank page, and approve the transaction. The status of your payment in EmaraTax may stay Pending for up to 30 minutes before changing to Completed, so always verify the final status after submitting the payment.

Local bank transfer

Local bank transfer is made using your unique GIBAN (Generated International Bank Account Number) assigned to your VAT account in EmaraTax.

Advantages: convenient for businesses that prefer paying via their UAE bank and can be used for VAT and related penalties.

Limitations: processing may take up to 24 hours, and you must use the exact GIBAN shown in your EmaraTax account to ensure proper allocation.

How to use: Log in to EmaraTax, go to My Payments, and note the GIBAN displayed for your VAT account. Initiate a local transfer from your UAE bank to this GIBAN, using the exact beneficiary details provided in EmaraTax. Do not use your Excise GIBAN to pay VAT liabilities (and vice versa); each tax has its own GIBAN, and using the wrong one may require a manual reallocation request to FTA.

International bank transfer

Non‑resident businesses or those using foreign bank accounts can pay VAT via international transfer to their VAT GIBAN.

Advantages: suitable for non-resident businesses.

Limitations: higher bank charges and longer processing times — up to 3–4 working days for the payment to be reflected in EmaraTax.

How to use: Retrieve your VAT GIBAN and beneficiary details from EmaraTax under My Payments. Initiate an international transfer from your foreign bank to this GIBAN, ensuring that the full amount due plus any bank fees is covered. For international payments, it is advisable to initiate the transfer at least one week before the payment deadline to avoid late‑payment penalties due to processing delays.

How your VAT payments are allocated in EmaraTax

When you make a payment through EmaraTax, the Federal Tax Authority allocates it according to a predefined payment allocation method. In My Payments, you can choose one of the following options:

• Tax Liability Cleared First – your VAT and Excise tax liabilities are cleared before administrative penalties.
• Administrative Penalties Cleared First – existing penalties are cleared before tax.
• Oldest Liability Cleared First – the oldest outstanding liability (tax or penalty) is settled first.

If you have no outstanding liabilities, any excess payment remains as a credit balance in your EmaraTax account and can be used for future obligations or claimed as a refund through the portal.

Penalties for late VAT payments

Failure to file and pay VAT on time can lead to significant administrative penalties imposed by the Federal Tax Authority (FTA). The exact amounts and progression of these penalties are set out in FTA legislation and guidance and may be updated from time to time.

Types of penalties

1. Late filing of VAT returns

If VAT returns are not filed by the deadline, a fixed administrative penalty applies, and higher penalties may be imposed for repeated late filings within a 24‑month period.

2. Late VAT payment

If VAT is not paid in full by the due date, FTA applies percentage‑based penalties on the unpaid tax, which increase over time and can reach up to 300% of the outstanding amount in severe cases.

3. Incorrect VAT filing

Errors or omissions in your VAT return can result in penalties calculated as a percentage of the underpaid tax, depending on the nature of the error and whether it was voluntarily disclosed.

Before relying on any specific figures, always check the latest Administrative Penalties table and guidance on tax.gov.ae or in your EmaraTax account.

Consequences of non-compliance

• Accumulated fines. Repeated non-compliance can lead to compounded fines, severely impacting cash flow and financial stability.
• Suspension of tax registration. The FTA reserves the right to suspend or cancel the tax registration of businesses with persistent non-compliance.
• Legal action. In severe cases, businesses may face legal consequences, including audits and further investigations.

How to avoid penalties

• Timely filing and payment. Mark all VAT deadlines in your calendar and ensure all returns and payments are submitted well before the due date.
• Accurate reporting. Double-check all VAT filings for accuracy to avoid fines for discrepancies.
• Professional assistance. Engage tax consultants or accounting software to streamline VAT compliance and minimize errors.

Tips for timely and accurate VAT payments

• Maintain accurate records
• Use VAT-compliant accounting software
• Monitor key deadlines
• Reconcile financial data regularly
• Seek professional assistance
• Use the FTA’s online portal effectively Ensure your EmaraTax / FTA e‑Services account is active and that you are familiar with payment options such as FAB Magnati card payments, eDebit, and GIBAN bank transfers before the deadline
• Plan for cash flow management
   

How we can help with VAT filing and payment

Our expert VAT services are designed to simplify compliance and provide tailored solutions that meet your specific needs.

• Professional VAT filing services

We handle the entire VAT filing process, from gathering the required data to submitting accurate VAT returns through the Federal Tax Authority (FTA) portal. Our team ensures that all taxable supplies, input VAT claims, and adjustments are properly accounted for, minimizing errors and the risk of penalties.

• Assistance with VAT payment methods

We guide businesses in choosing the most convenient VAT payment method, whether it’s through e-Dirham, eDebit, or bank transfers. Our support includes setting up payment channels, ensuring transactions are processed on time, and resolving any payment-related issues with the FTA.

• Compliance monitoring

To help you stay compliant, we provide ongoing monitoring of your VAT obligations, including reminders for filing deadlines and payment due dates. This proactive approach reduces the risk of missed deadlines and non-compliance penalties.

• Support for VAT refunds and disputes

Our team can assist in claiming VAT refunds on eligible expenses and resolving disputes with the FTA. Whether it’s recovering overpaid VAT or responding to tax authority queries, we ensure your interests are protected.

• Tailored VAT solutions

Every business has unique VAT needs. We offer customized solutions, including VAT training, software implementation, and advisory services to streamline your tax operations and optimize compliance.