The UAE has charged 5% VAT since 2018, one of the lowest rates in the world. You will see it on restaurant bills, phone plans, petrol, groceries and your DEWA bill.
But a surprising amount of everyday spending carries no VAT at all. Your rent, your metro fare and much of your children's school tuition are all outside the 5%. Knowing which is which helps you read bills correctly and spot when a business is charging VAT it should not.
Here is the map of what you pay and what you do not.
The standard 5% rate: most things you buy
Unless a supply is specifically zero-rated or exempt, it carries 5% VAT. In practice that covers:
- Groceries, restaurants and food delivery
- Electronics, clothing and household goods
- Petrol, car purchases, servicing and Salik top-ups
- Utilities (electricity, water, cooling) and telecoms
- Hotel stays, entertainment and gym memberships
- Commercial rent and most professional services
Displayed prices must include VAT for consumers, so the shelf price is the final price. Restaurant menus and retail tags already have the 5% baked in; a separate VAT line on the receipt is just the breakdown, not an extra charge.
Zero-rated: 0% VAT, mostly good news for your wallet
Zero-rated supplies are technically taxable, but at 0%. The distinction from "exempt" mainly matters to businesses reclaiming costs; for you as a consumer, both mean no VAT on the bill. The big zero-rated categories:
- Exports of goods and services outside the GCC
- International flights and international transport
- Approved education: tuition at recognised nurseries, schools and government-curriculum higher education (uniforms, food and extracurricular extras usually still carry 5%)
- Basic and preventive healthcare and related medicines (purely cosmetic procedures carry 5%)
- The first sale or lease of a new residential building within three years of completion
- Investment-grade precious metals such as 99%+ pure gold bars
School fees are the one families feel most. Tuition itself is zero-rated at approved schools, which is why the tuition line on a KHDA school invoice shows no VAT while the bus and uniform lines do.
Exempt: rent, local transport and some financial services
Exempt supplies sit fully outside VAT. The ones that matter day to day:
- Residential rent. Your annual lease has no VAT on it, which matters when rent is your biggest cost. If a landlord or agent adds 5% VAT to residential rent, question it; only the agency commission carries VAT. More in our guide to renting your first apartment in Dubai.
- Local passenger transport. Metro, tram, public buses and taxis charge no VAT.
- Bare land sales.
- Certain financial services, such as margin-based products and life insurance. Note that explicit bank fees generally do carry 5%.
This is why your monthly budget is less affected by VAT than the headline suggests: the two biggest lines for most residents, rent and school tuition, carry none. See real numbers in our Dubai cost of living breakdown.
Tourists and visitors can claim refunds
Visitors can reclaim VAT on goods bought from retailers in the Tax Refund for Tourists scheme. The process:
- Ask for a tax-free purchase at checkout and show your passport (minimum spend is around AED 250 per receipt; confirm the current figure with the operator).
- At the airport, validate the purchases at the refund kiosks before check-in for large items.
- Receive the refund to card or in cash, minus a processing fee, so expect roughly 85% of the VAT back.
Residents cannot use the scheme, but family visiting you can, which takes a real edge off gold and electronics shopping.
Key takeaway
Everything defaults to 5% VAT unless it is zero-rated (approved tuition, basic healthcare, international travel, new homes) or exempt (residential rent, metro and taxis, bare land). Displayed consumer prices must already include VAT, so the price you see is the price you pay. If someone adds 5% on top of residential rent, they are getting it wrong.
FAQ
Is there VAT on rent in the UAE?
Not on residential rent, which is exempt. Commercial rent, such as an office or shop, carries the standard 5%. Agency commission on a residential letting does carry VAT, because that is a service, not rent.
Do school fees have VAT?
Tuition at recognised schools following an approved curriculum is zero-rated, so no VAT. Extras billed separately, such as uniforms, school meals, trips and after-school activities, usually carry 5%.
Is healthcare free of VAT?
Basic and preventive healthcare services, and medicines on the approved list, are zero-rated. Elective cosmetic treatments carry the standard 5%. Health insurance premiums also carry 5%.
Will the UAE VAT rate go up?
The rate has stayed at 5% since introduction in 2018, and no increase has been legislated. Any change would be announced well in advance by the Federal Tax Authority, so treat rumours of imminent rises with scepticism.
