The FTA has reiterated that zero-rating (0%) for exports applies only when all export evidence is complete and verifiable.
Missing or incomplete documentation could mean that the transaction is treated as taxable at 5%.

What Advisors Should Do:

• Ensure clients maintain comprehensive export documentation — including invoices, shipping papers, and customs records.

• Conduct periodic internal audits to verify that every export transaction is supported by proper proof.

• Educate clients about the importance of timely submission of export evidence to avoid VAT adjustments.

Free Zone Rules — Goods May Qualify, Services Don’t

Designated Free Zones continue to receive special VAT treatment — but only for goods that meet strict customs-control criteria.
FTA clarifies that services provided within these zones remain taxable at 5%, unless specifically exempted.

Advisor Tip:
Review your clients’ contracts carefully. If the service is performed or consumed within the UAE — even inside a Free Zone — it will likely be subject to VAT.

Input VAT Recovery — Follow New FTA Guidance

One of the key 2025 clarifications concerns input VAT recovery.
The FTA has refined the rules on when input VAT can be claimed — particularly for companies involved in mixed-use supplies (both taxable and exempt).

What to Review:

• Input VAT should only be recovered for eligible business expenses.

• Businesses must maintain clear expense categorization and proper VAT invoices.

• For mixed-use costs, use the correct apportionment methods as per FTA guidance.

Advisors should help clients establish a proper documentation system for all recoverable and non-recoverable VAT.

VAT Health Check — Why It’s Crucial in 2025