Value Added Tax or VAT is a tax on the consumption or use of goods and services levied at each point of sale. VAT is a form of indirect tax and is used in more than 180 countries around the world. The end-consumer ultimately bears the cost. Businesses collect and account for the tax on behalf of the government.
A business must register for VAT if its taxable supplies and imports exceeds AED 375,000 per annum. It is optional for businesses whose supplies and imports exceed AED 187,500 per annum. A business house pays the government the tax that it collects from the customers, but at the same time it receives a refund from the government on tax that it has paid to its suppliers. Foreign businesses may also recover the VAT they incur when visiting the UAE.