Definition

A Taxable Supply is any supply of goods or services in the UAE that is subject to VAT, either at the standard 5% rate or the 0% rate.

Key points

• Includes sales, imports, and certain deemed supplies.
• Excludes exempt supplies such as residential rent or local passenger transport.
• The supplier must be VAT-registered and issue a valid tax invoice.
• Recorded in the VAT return as output VAT.

Practical example

A Dubai IT company sells software to a UAE business for AED 10,000 + 5% VAT. This transaction is a taxable supply.

Why it matters

Recognizing taxable supplies correctly ensures accurate VAT reporting and avoids underpayment penalties.