February 23, 2026
Methodology About Newsletter
WE THE UAE 2031
The Vanderbilt Terminal for the UAE's National Transformation
INDEPENDENT GLOBAL INTELLIGENCE FOR THE UNITED ARAB EMIRATES
UAE GDP: AED 2.03T ▲ 5.7% | Non-Oil GDP Share: 84.3% ▼ -5.2pp | FDI Inflows: $45.6B ▲ 48.7% | GDP Growth: 4.0% ▲ -0.3pp vs 2023 | Inflation: 1.7% ▼ +0.0pp vs 2023 | Female Participation: 55.1% ▲ +0.6pp vs 2023 | Population: 11.0M ▲ 4.8% | Emiratisation Rate: 12.5% ▲ 2.1pp | Global Competitiveness: #7 ▲ 3 places | Clean Energy Capacity: 7.2 GW ▲ 18.4% | ADX Index: 9,842 ▲ 4.7% | DFM Index: 4,621 ▲ 6.2% | UAE GDP: AED 2.03T ▲ 5.7% | Non-Oil GDP Share: 84.3% ▼ -5.2pp | FDI Inflows: $45.6B ▲ 48.7% | GDP Growth: 4.0% ▲ -0.3pp vs 2023 | Inflation: 1.7% ▼ +0.0pp vs 2023 | Female Participation: 55.1% ▲ +0.6pp vs 2023 | Population: 11.0M ▲ 4.8% | Emiratisation Rate: 12.5% ▲ 2.1pp | Global Competitiveness: #7 ▲ 3 places | Clean Energy Capacity: 7.2 GW ▲ 18.4% | ADX Index: 9,842 ▲ 4.7% | DFM Index: 4,621 ▲ 6.2% |

Definition

Value-Added Tax (VAT) is an indirect consumption tax levied on the value added at each stage of the supply chain, from production through distribution to final sale. Unlike a sales tax applied only at the point of retail purchase, VAT is collected incrementally by each business in the chain, with each entity claiming credits for VAT already paid on its inputs. This self-policing mechanism makes VAT one of the most efficient and widely adopted consumption taxes globally, used by more than 170 countries.

UAE Context

The UAE implemented VAT at a rate of 5 percent on 1 January 2018 under Federal Decree-Law No. 8 of 2017. The Federal Tax Authority (FTA) administers VAT registration, filing, and compliance. Businesses with annual taxable supplies exceeding AED 375,000 must register for VAT; those exceeding AED 187,500 may register voluntarily. Certain supplies are zero-rated (including exports and international transport) or exempt (including residential property, bare land, and certain financial services). Healthcare and education services meeting specific criteria are also zero-rated.

Key Data

VAT generated approximately AED 47 billion in cumulative federal revenue in its first five years of implementation. The FTA has registered more than 350,000 businesses for VAT. The UAE’s 5 percent rate is among the lowest globally, maintaining the country’s competitiveness as a low-tax jurisdiction while providing a meaningful and sustainable revenue stream. The tax has become the single largest source of federal non-oil revenue.

Vision 2031 Significance

VAT is a cornerstone of the UAE’s fiscal sustainability strategy. By creating a diversified, non-hydrocarbon revenue base, it reduces the federal budget’s dependence on oil income and provides a stable funding mechanism for public services, infrastructure, and national development programmes central to Vision 2031 objectives.

  • Corporate Tax UAE — The complementary direct tax introduced in 2023.
  • Federal Tax Authority (FTA) — The agency administering VAT compliance.
  • Economic Diversification — The strategic framework that motivated VAT introduction.
  • GCC Tax Framework — The regional agreement under which UAE VAT was introduced.