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VAT Health Check in the UAE: Key Information

What is a VAT Health Check?

A “VAT health check” is an audit of a company’s VAT compliance and reporting procedures and processes. The VAT health check (VHC) aims to find areas where the business could do better and ensure it follows all the right VAT rules, regulations, and procedures. It involves an inspection of registration, reporting, invoicing, and returns with respect to VAT. A VAT health check may also include a comprehensive review of the company’s VAT records, systems, and processes. This is also to ensure that the company is adhering to its VAT obligations. The end product of a VAT health check may include a report with recommendations to improve VAT compliance and reporting. The VAT health check enables businesses to avoid fines and penalties by proactively improving their overall compliance. This can be achieved by correcting errors before the FTA audit.

Why is There a Need for a VAT Health Check in the UAE?

The concept of VAT (and VHC) is not very old in the UAE. On January 1, 2018, the United Arab Emirates implemented a value-added tax for the first time. The UAE’s general rate for most goods and services is 5%. However, certain goods and services are exempt from taxation if the business meets certain criteria. A business must register for VAT if it had a turnover of AED 375,000 or more in the last 12 months or if it is expected to surpass that in the next 30 days. However, firms with an annual revenue of AED 187,500 can opt for voluntary registration. Therefore, in the UAE, businesses should adhere to VAT compliance requirements. As a result, a VAT health check is relevant for UAE businesses to avoid penalties and streamline processes.

The Importance of a VAT Health Check in the UAE

A VAT health check in the UAE is a review of a corporation’s compliance with the UAE’s VAT regulations. The health check will ensure that businesses are following proper VAT procedures, including transactions, liabilities, and filing. The Federal Tax Authority (FTA) is in charge of VAT compliance in the UAE. Businesses in the UAE must follow FTA VAT regulations, which include requirements for VAT registration and submission, invoicing, and record keeping. Businesses may realize certain benefits from VHC. Let’s go over a few of them.

Avoid fines and penalties:

The UAE government imposes several fines and penalties for VAT non-compliance. In order to avoid late payment fines and other penalties, businesses must be well informed. For example, failing to display VAT-inclusive prices carries a penalty of AED 5,000. A late VAT submission can also result in a penalty of up to 300% of the liability. As a result, a VAT health check will enable the company to identify areas of violation and thus avoid penalties. Please note that fines and charges are subject to change.

Keep proper VAT records and streamline processes:

Aside from avoiding fines, having a VHC has other advantages. A VAT health check will identify areas for improvement in VAT records, systems, and procedures. By acting on such recommendations, the company will save time and concentrate on key business areas. A streamlined process is always advantageous for long-term business goals.

Learn about VAT regulations and procedures:

With the help of a team of experts, the company will be able to learn everything it needs to know about VAT, from filing to documenting and submitting. As a result, the company may not require a VHC every year. This will eventually reduce costs as well as fines and penalties. However, a VHC is recommended to be aware of current industry updates and keep yourself informed. As a result, health checks should be done at reasonable, regular intervals.


With the implementation of VAT in the UAE, it is critical to understand VAT regulations and procedures in order to avoid late payment penalties and other fines. A VAT health check is a thorough examination of a company’s VAT processes and procedures. It assesses a company’s adherence to VAT regulations and VAT-related transactions. A business must undergo a VAT health check to avoid fines and penalties. A VHC can help businesses streamline their operations and keep proper records. Furthermore, a VHC conducted by experts is an excellent way to learn everything there is to know about VAT in the UAE. This way, you can stay up-to-date on all tax changes as well as establish better policies and procedures for your business.

What can we do to assist you?

We at Creative Zone Tax Accounting provide all tax-related services for your business, including VHC, with a team of highly qualified tax professionals. If you are unsure about anything, please get in touch with us; we will never let you down. Due to the complexity of taxation, consulting with an expert always proves beneficial. A query is free of charge!