The UAE operates multiple tax regimes, with Value Added Tax (VAT) and Corporate Tax (CT) being the most significant for businesses. While both are administered by the Federal Tax Authority (FTA), they serve different purposes, apply to different tax bases, and impose distinct compliance obligations.
Understanding the key differences between VAT and Corporate Tax is essential for business owners to ensure accurate compliance, avoid penalties, and plan effectively.
JACA Tax Consulting is an FTA-approved tax agency in Dubai, supporting businesses with end-to-end VAT and Corporate Tax compliance services aligned with Federal Tax Authority requirements.
Value Added Tax (VAT) was introduced in the UAE in 2018 as a consumption tax on goods and services. It is generally charged at 5% and collected by businesses on behalf of the government.
Corporate Tax, introduced from financial years starting on or after 1 June 2023, is a direct tax on business profits, levied at 9% on taxable income exceeding AED 375,000.
Although both taxes apply to businesses, their scope, calculation, and compliance requirements differ significantly.
VAT is an indirect tax. The tax burden is ultimately borne by the end consumer, while businesses act as tax collectors for the FTA.
Corporate Tax is a direct tax. It is paid by the business itself based on its net profits after allowable deductions.
VAT is calculated on:
The value of taxable supplies of goods and services
Output VAT charged to customers
Input VAT recovered on eligible business expenses
Corporate Tax is calculated on:
Accounting profit adjusted for tax purposes
Taxable income after exemptions and deductions
Application of the 9% tax rate on profits above AED 375,000
As a result, a business may be VAT-registered without being subject to Corporate Tax, or vice versa.
VAT registration is mandatory if taxable supplies exceed AED 375,000 in any 12-month period. Voluntary registration is available from AED 187,500.
Corporate Tax registration is mandatory for most UAE businesses, regardless of turnover, including entities with zero tax liability.
Failure to register under either regime may result in administrative penalties.
VAT returns are submitted monthly or quarterly, while Corporate Tax returns are filed annually.
Taxpayers must calculate the correct tax liability based on accounting records and submit returns within prescribed deadlines.
Payments can be made via e-Dirham, bank transfer (GIBAN), or UAE credit/debit cards.
JACA Tax Consulting is an FTA-approved tax agency in Dubai, supporting businesses with accurate filing and payment compliance.
VAT is an indirect tax. The tax burden is ultimately borne by the end consumer, while businesses act as tax collectors for the FTA.
Corporate Tax is a direct tax. It is paid by the business itself based on its net profits after allowable deductions.
VAT is an indirect tax. The tax burden is ultimately borne by the end consumer, while businesses act as tax collectors for the FTA.
Corporate Tax is a direct tax. It is paid by the business itself based on its net profits after allowable deductions.
VAT and Corporate Tax are distinct but interconnected tax regimes. Businesses that understand their differences and compliance requirements are better positioned to manage risk, maintain profitability, and avoid penalties.
JACA Tax Consulting assists businesses in managing both VAT and Corporate Tax obligations through:
VAT registration, filing, and advisory
Corporate Tax registration and compliance
Tax impact assessments
Accounting and documentation support
Ongoing regulatory advisory
Our approach ensures accuracy, consistency, and alignment with FTA expectations.
