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UAE Tax Agent (Federal Tax Authority) · VAT and Excise Tax

UAE Tax VAT VAT framework and registration: practice questions with answers

6 free exam-style questions on VAT framework and registration for UAE Tax VAT VAT and Excise Tax. Try each one, then open the answer to read the explanation. Fincora has 28 original questions on this syllabus area.

Question 1

An adviser is updating a client's VAT procedures manual for the changes that Cabinet Decision No. 149 of 2026 made to the Executive Regulation, most of which apply from 1 October 2026. Which of these changes belongs in that update?

  1. A For input tax on financial services to non-residents, "outside the State" now means in the UAE under 30 days
  2. B A registrant receiving services from abroad no longer issues itself a tax invoice under the reverse charge
  3. C Late payment of payable tax attracts a penalty of 14% a year, charged monthly on the unpaid amount
  4. D A person with revenue of AED 50 million or more must appoint an Accredited Service Provider for e-invoicing
Show the answer

Answer: A. Cabinet Decision No. 149 of 2026 amended the VAT Executive Regulation, mostly from 1 October 2026. One change is to Article 52(2), which decides when the recipient of exempt financial services is outside the State (so that the supplier can recover the related input tax): a person present in the UAE for less than 30 days (previously "less than a month"), where the presence is not effectively connected with the supply, is treated as outside the State. This aligns it with the 30-day test already used for zero-rated exports of services in Article 31(2).

The other changes come from different instruments:

- no reverse-charge self-invoice: Federal Decree-Law No. 16 of 2025 (Article 48(1), VAT Decree-Law), from 1 January 2026;
- 14% a year late-payment penalty: Cabinet Decision No. 129 of 2025 amending Cabinet Decision No. 40 of 2017, from 14 April 2026;
- ASP appointment for persons with revenue of AED 50 million or more: Ministerial Decision No. 244 of 2025, deadline extended to 30 October 2026.

Question 2

Bahar Marine Supplies LLC began trading on 1 January 2026 and is not registered. Its taxable supplies from January to July 2026 total AED 162,000. On 3 August 2026 it signs a contract to deliver marine equipment worth AED 410,000 (excluding VAT) to a UAE boatyard by 28 August 2026. Which statement is correct?

  1. A It need not register until its supplies over a past 12-month period exceed AED 375,000
  2. B It may register voluntarily but need not, as its past supplies are below AED 375,000
  3. C It need not register, as a single large contract is left out of the threshold test
  4. D It must apply to register, as its supplies are expected to exceed AED 375,000 in the next 30 days
Show the answer

Answer: D. Article 13 of the VAT Law requires a resident person to register if taxable supplies and imports either exceeded AED 375,000 over the previous 12 months or are expected to exceed AED 375,000 in the next 30 days.

Bahar's past supplies (AED 162,000) do not trigger registration, but the contract alone will produce supplies of AED 410,000 within the next 30 days. Bahar must therefore apply to register, within 30 days, before those supplies are made.

Question 3

Qamar Print Studio LLC is not registered. Its taxable supplies for the 12 months ended 31 May 2026 were AED 381,000, the first time they exceeded the mandatory threshold. It submitted its registration application on 15 September 2026. Which statement is correct?

  1. A It should have applied by 30 June 2026 and faces AED 1,000 plus AED 1,000 per month of delay
  2. B It should have applied by 30 June 2026 and faces an administrative penalty of AED 10,000
  3. C It should have applied by 28 June 2026 and faces an administrative penalty of AED 10,000
  4. D It had until 30 September 2026, the end of the next quarter, so no penalty arises
Show the answer

Answer: B. A person whose taxable supplies over the previous 12 months exceed AED 375,000 must apply for registration within 30 days (Article 13, VAT Law, and the Executive Regulation). The threshold was exceeded at 31 May 2026, so the application was due by 30 June 2026.

Applying on 15 September 2026 is late. Under Cabinet Decision No. 40 of 2017 as amended by Cabinet Decision No. 129 of 2025 (applying from 14 April 2026), the penalty for failing to apply for registration on time is a fixed AED 10,000.

Question 4

Lamsa Flowers LLC, a registrant with calendar-quarter tax periods, sold its last stock and stopped making taxable supplies on Monday 5 October 2026. It has no plans to trade again. The UAE weekend is Saturday and Sunday. Assuming no public holidays fall in the period, by what date must Lamsa apply to deregister?

  1. A Monday 2 November 2026
  2. B Sunday 25 October 2026
  3. C Wednesday 28 October 2026
  4. D Wednesday 4 November 2026
Show the answer

Answer: A. A registrant must apply to deregister when it stops making taxable supplies (Article 21, VAT Law). The application is due within 20 business days of the event (Executive Regulation, Article 14).

Counting Monday to Friday from Monday 5 October 2026: four full weeks give 20 business days, ending on Monday 2 November 2026.

A late application attracts a penalty of AED 1,000, then AED 1,000 for each further month, up to AED 10,000 (Cabinet Decision 40/2017 as amended by Cabinet Decision 129/2025).

Question 5

Hala Photo Studio LLC stopped trading and applied on 2 October 2026 to deregister. It has not yet filed its return for the quarter ended 30 September 2026, which will show payable tax of AED 18,400, and it still owes a late-filing penalty of AED 1,000 from an earlier period. Which statement is correct?

  1. A Applying to deregister cancels the unpaid penalty and the tax that the outstanding return will show
  2. B The FTA will approve the deregistration only once all returns are filed and all tax and penalties due are paid
  3. C Once deregistered, Hala cannot be audited or assessed for any tax period before its deregistration
  4. D Hala need not file the September 2026 return, because it applied to deregister before the return was due
Show the answer

Answer: B. Under Article 21 of the VAT Decree-Law, deregistration does not extinguish the FTA's right to claim tax and penalties and does not relieve a person of tax and penalties due, or of its obligations for the periods in which it was registered. The Executive Regulation (Article 14) requires a registrant applying to deregister to pay all tax and administrative penalties due and file its final and outstanding tax returns; the FTA approves the application only once this is done.

Hala must file its September 2026 return and pay the AED 18,400 and the AED 1,000 penalty before deregistration is approved. The FTA can still audit and assess earlier periods within the time limits of the Tax Procedures Law.

Question 6

A tax agent is updating a VAT registrant's compliance calendar for recent legislative changes. Which change is paired with the date from which it applies?

  1. A Revised administrative penalties under Cabinet Decision No. 129 of 2025, including late payment at 14% a year: from 1 January 2026
  2. B Tax credit notes must carry the words "Tax Credit Note" under Cabinet Decision No. 149 of 2026: from 1 January 2026
  3. C Exemption for the transfer and conversion of virtual assets under Cabinet Decision No. 100 of 2024: from 15 November 2024 only
  4. D Recipients stop issuing self-invoices for supplies under the reverse charge, under Decree-Law No. 16 of 2025: from 1 January 2026
Show the answer

Answer: D. Each change came in through a different instrument with its own start date:

| Change | Instrument | Applies from |
|---|---|---|
| No self-invoice for reverse-charge supplies (Article 48(1)) | Federal Decree-Law No. 16 of 2025 | 1 January 2026 |
| Revised administrative penalties (e.g. 14% a year for late payment) | Cabinet Decision No. 129 of 2025, amending Cabinet Decision No. 40 of 2017 | 14 April 2026 |
| "Tax Credit Note" wording on tax credit notes | Cabinet Decision No. 149 of 2026 (Executive Regulation) | 1 October 2026 |
| Exemption for transfer and conversion of virtual assets | Cabinet Decision No. 100 of 2024 (Executive Regulation) | Retrospectively from 1 January 2018 |

Only the reverse-charge change is correctly dated.

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