Tax Agents and VAT Compliance in the UAE

Since Value Added Tax (VAT) was introduced in the UAE in 2018, compliance has become a key part of every business’s operations.
However, many companies — especially SMEs and startups — find it challenging to interpret VAT rules, manage filings, and respond to Federal Tax Authority (FTA) inquiries.

This is where Tax Agents play a crucial role. Appointed and authorised by the FTA, Tax Agents help businesses ensure full VAT compliance, manage filings accurately, and avoid penalties for non-compliance.

VAT Compliance Overview in the UAE

VAT in the UAE is governed by Federal Decree-Law No. (8) of 2017 and its Executive Regulations.
Businesses that exceed the mandatory registration threshold of AED 375,000 must register for VAT, charge VAT on taxable supplies, and file returns periodically.

Failure to comply can result in:

• Administrative penalties,

• Late filing fines, and

• Reputational damage with the FTA.

The Role of a Tax Agent in VAT Compliance

VAT Registration and Deregistration

Tax Agents assist businesses in:

• Determining whether they meet mandatory or voluntary registration thresholds.

• Completing VAT registration or deregistration through the FTA e-Services portal.

• Updating registration details (like trade license or address changes).

This ensures businesses are always registered correctly and legally compliant.

Preparing and Filing VAT Returns

VAT returns must be filed quarterly (or monthly for certain businesses).
A Tax Agent ensures:

• All taxable supplies, imports, and expenses are correctly reported.

• Input VAT and output VAT are reconciled.

• VAT returns are filed on time to avoid penalties.

Tax Agents also verify accuracy by cross-checking accounting data against invoices and bank records.

Managing VAT Refunds

Tax Agents handle refund claims when businesses are eligible to recover input VAT — for example:

• When input VAT exceeds output VAT.

• In cases of bad debt relief or end-of-period adjustments.

They ensure refund applications meet FTA documentation standards for smooth processing.

Handling VAT Audits and FTA Inquiries

In the event of an FTA audit or inquiry, the Tax Agent acts as your official representative.
They communicate directly with the authority, prepare supporting documents, and respond to queries — helping businesses maintain compliance without disruption.

Advising on VAT Treatments

Tax Agents also advise on VAT implications for complex transactions, including:

• Zero-rated and exempt supplies.

• Free Zone operations.

• Imports and exports.

• Reverse charge mechanisms.

They ensure businesses apply the correct VAT treatment in every scenario.

Example

A construction company regularly imports materials from outside the UAE. Its internal accountant misapplied the reverse charge mechanism, causing VAT discrepancies.
After appointing a Tax Agent, the issue was corrected, previous errors reconciled, and future compliance processes automated — avoiding FTA penalties.

Benefits of Using a Tax Agent for VAT