UAE VAT Compliance in 2025: What Changed & What You Need to Know
Introduction
The UAE’s VAT framework continues to evolve—and in 2025, businesses must act quickly to stay compliant and benefit from new exemptions and digital mandates. Key updates include revisions to VAT regulations, new refund tools, e‑invoicing timelines, and sector-specific reliefs. Let’s break down what changed—clearly, accurately, and with actionable steps.
1. Executive Regulations Amendments (Effective November 15, 2024)
Cabinet Decision No. 100 of 2024 introduced extensive updates to the VAT Executive Regulations, impacting sectors such as real estate, finance, transportation, and charitable entities. Key changes include:
- VAT exemption extended to investment fund services and virtual assets, meaning many crypto-related and fund management services now qualify for exemption—retroactive to 2018.
- In-kind donations between charities and government—up to AED 5 million/year—now exempt.
- Clarity on zero-rating limits for export services, transportation, and hotel services – stricter documentation is now required.
2. E‑Invoicing Requirements Roll Out
To modernize VAT compliance, the Ministry of Finance passed amendments in late 2024 requiring e‑invoicing:
- New definitions added to the VAT law to support digital record-keeping and the e‑invoicing platform.
- Businesses must partner with an Accredited Service Provider (ASP) to validate and report invoices via the Peppol network.
- Phase 1 begins mid‑2025 (turnover over AED 50 million), with full rollout by July 2026.
3. VAT Treatment for E‑Commerce, Real Estate & Precious Metals
E‑Commerce & Digital Services
- Non‑resident suppliers providing digital services to UAE consumers are now required to register for VAT when revenue exceeds AED 375,000/year—closing previous loopholes.
Real Estate Transactions
- Residential property sales remain exempt, but commercial property sales above AED 375,000 attract 5% VAT—confirmed via FTA enforcement notices and real estate cases.
- Simplified VAT invoices now allowed for smaller supplies (≤ AED 10,000), with standard invoices due within 14 days of month-end for bigger transactions.
Precious Metals
- UAE expanded the Reverse Charge Mechanism (RCM) to cover major precious metals and gemstones. VAT‑registered buyers must self-account for VAT in resale or manufacturing scenarios.
4. Input VAT and Capital Asset Adjustments
- Clause 17 of Article 58 clarifies that VAT adjustments on self-developed capital assets begin in the year the asset is first used—not necessarily when constructed.
- Article 53 now allows businesses to recover VAT on employee health insurance for one spouse and up to three children, even when not legally mandated
5. Voluntary Disclosure & Penalty Relief
- Under Decision No. 8 of 2024, businesses can file a voluntary disclosure to correct non-material VAT return errors without additional tax liability, provided due tax remains unchanged.
- This simplifies compliance in cases like misreporting exempt supplies or emirate details.
6. VAT Refunds via “Maskan” App
- The Maskan app, launched by the FTA in 2025, disbursed AED 2.9 billion in refunds to 34,900 users—streamlining VAT refunds for both consumers and businesses
7. Key Compliance Checklist & Table
| Change | Effective Date | Who Needs to Act | Action Steps |
|---|---|---|---|
| Executive Regulation Amendments | Nov 15, 2024 | Real estate, finance, crypto, export services | Review treatment of income; update systems and training |
| E-invoicing mandate | Mid‑2025 (phase 1) | Businesses > AED 50m turnover | Select ASP; integrate with Peppol; train staff |
| VAT on digital services | Ongoing | Foreign digital suppliers | Assess threshold; register if needed |
| Reverse Charge for precious metals | Nov 2024 | Precious metals traders | Update invoicing; self-account VAT |
| Capital asset scheme | Jan 2025 | Manufacturing, real estate entities | Adjust VAT schedules per use date |
| Employee benefits VAT | Q1 2025 | Large employers | Update input VAT apportionment |
| Voluntary disclosures | Jan 2025 onwards | All VAT-registered firms | File disclosures if minor errors detected |
| Maskan app refunds | 2025 | Eligible VAT payers | Use app to claim refunds |
8. FAQs
Q: When does e-invoicing become mandatory?
Phase 1 begins mid‑2025 for businesses with turnover above AED 50 million; full rollout by July 2026
Q: Are crypto transactions subject to VAT?
No—the FTA clarified that personal crypto mining is VAT-exempt; professional services subject to 5% VAT for UAE clients
Q: Can I recover VAT on employee insurance?
Yes—input VAT recovery is allowed on spouse and up to three dependents under Article 53 changes
Conclusion & Next Steps
The 2025 VAT updates reflect the UAE’s push toward digital compliance, greater transparency, and alignment with international standards. Whether you’re in finance, e-commerce, real estate, or manufacturing, you’ll need to:
- Update systems and policies
- Train staff
- Reassess transaction types and VAT treatment
- Register and report correctly, especially on digital sales or cross-border supplies
Want help updating your VAT process, implementing e-invoicing, or preparing for upcoming FTA audits? Let’s get a call booked and ensure you’re 100% compliant and avoid these common mistakes during the VAT compliance process.
