UAE VAT: 8 Common Compliance Mistakes and How to Avoid Them

With the FTA conducting over 93,000 inspection visits in 2024, UAE businesses face greater VAT audit risk than ever before. Here are the eight most common VAT compliance mistakes we identify at SAE.

1. Incorrect VAT registration threshold assessment — businesses must register when taxable supplies exceed AED 375,000 over 12 months. 2. Missing reverse charge VAT on imported services — many businesses overlook VAT due on services sourced from overseas suppliers. 3. Incorrect treatment of entertainment expenses — input VAT on entertainment is blocked; many businesses wrongly recover it. 4. Late VAT return filing — penalties begin from the first day of delay. 5. Incorrect zero-rating of exports — documentation requirements for 0% VAT on exports are strict. 6. Failure to reconcile VAT returns with accounting records — discrepancies attract FTA scrutiny. 7. Incorrect VAT grouping — businesses under common ownership can form VAT groups but must meet specific criteria. 8. Poor record retention — VAT records must be kept for five years; from 2026, unrecovered credits also lapse after five years.

SAE conducts VAT health checks, identifies gaps, and prepares businesses for FTA audit readiness.