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VAT for Restaurants

A growing variety of foreign and local concepts in the restaurant industry have raised the level of competition in the Dubai restaurant sector. Ethnicities in food cultures bring together the hands over tastes and a wide variety of services. VAT is an indirect tax charged on goods and services from the point of origin to the point of consumption. VAT is generally applicable to restaurant or food bills. Restaurant services are required to charge VAT at 5% to its customers. As per the law, VAT is charged on all kinds of food services including Arabic, Continental, Chinese and other restaurants in. A business register for VAT if their annual turnover exceeds the threshold of AED 375,000 as per the current year. There exists an option for voluntary registration if there is a threshold of AED 187,500. The government of UAE and the Federal Tax Authority (FTA) defined this process of the threshold for registration and reporting of VAT. 


* Restaurants are required to issue VAT invoices to customers when goods and services provided are more than AED 100,00.

* Restaurants can claim input tax on the expenses incurred for business purposes. The instances are the purchase of food items, rental expenses, delivery vehicles, equipment used in the kitchen for cooking, furniture and fixtures, stationery, office equipment. 

* Restaurants must maintain all the business records and documents for a period of 5 years.

VAT impact on Restaurants in the UAE

Introduction of VAT in UAE had made a huge impact on the restaurant sector it includes:

  • Compulsory financial record maintenance
  • Implementation of VAT software in the organisation to maintain uniform recordings
  • Dynamic consumers spending pattern
  • VAT to be paid on the imported raw materials in the business chain

Different Tax Patterns

  • Purchases of essential and staple food items are Zero-rated.
  • Outsourced manpower in the restaurant industry can be claimed as an input tax credit.
  • On food items mentioned in the list of Goods approved by the Financial and Economic Cooperation Committee will be zero-rated.
  • VAT on food and beverages is 5%
  • Restaurant and catering services are subjected to 5% VAT

Display of Menu Price

Restaurants are given two options of pricing in their menu. It includes:

  • VAT inclusive to the prices
  • VAT exclusive by giving a footnote of 5% standard rate

Tax Assessment and Penalties

In non-compliance, FTA issues a tax assessment with the tax payable within five business days of its issuance.

  • Administrative Penalties
  • Penalties in case of tax evasions discovered by the court
  • FTA conducts VAT audits with five days’ notice if fraud is suspected

How CDA helps you?

CDA VAT consultancy services in Dubai and UAE are tailor-made to meet the unique requirements of the customers. At CDA, we conduct an in-depth analysis to understand your business complexities extending from your services to accounting, taxation, auditing, and VAT services. Our VAT specialists having relevant industry-specific experience in taxation in compliance with international standards can help you successfully complete all your VAT activities without any fail.

CDA VAT experts on restaurant sectors help you with:

  • VAT Registration & tax filing process
  • VAT planning
  • Track books of records maintenance
  • Maintain financials
  • Train you on VAT laws in UAE
  • Interpret and classify tax groups
  • Process with accurate and quick tax filing
  • Update you with FTA’s new legislation and rules
  • Provide unique advice on financial and legal issues
  • Provide advice on VAT rates

CDA Services

CDA serves a vast number of clients from the restaurant sector across the UAE. Our team is well experienced in providing VAT services for restaurants. We provide cost-effective value-added solutions to reduce Tax burdens meeting all your business needs. Our well-experienced team handles the Tax consultation and Tax auditing services at your ease with the highest level of professional ethics and quality.

Frequently Asked Questions [FAQ]

1. How is VAT applied in the UAE?

The VAT rate is 5 percent on all goods and services in UAE other than some exemptions.

2. What are tax exemptions in the UAE?

  • Financial Services
  • Supply of residential buildings through sale or lease
  • Supply of bare land
  • Supply of local passenger transport

3. Under what instances input tax credits are obtained?

Restaurants can claim input tax on the expenses incurred for business purposes. The instances are Purchase of Food items, Rental expenses, Delivery Vehicles, Equipment used in Kitchen for cooking, Furniture and Fixtures, Stationery, Office equipment.

4. What is the deadline for VAT return filing?

The deadlines are clearly mentioned in the TRN certificate and it is monthly or quarterly based. The payment of due tax is on the 28th day of the tax period.

5. Is it compulsory to pay the Tax for the invoice which I have not been paid till now?

If you have raised a Tax Invoice we are liable to pay the VAT to the government, if the customers do not make the payment in future we can issue a Tax Credit Note and reclaim the amount we have paid in excess.

6. How much do you charge for VAT services in the restaurant sector?

Our charges purely depend on the: transactions complexity, accounting software used and skill required.

7. Under what per day receipt limit a restaurant should register?

At aggregate receipts of AED 1000 per day or above, the restaurant would be required to register with FTA.

8. Display of menu price in restaurants, is it VAT inclusive or exclusive?

Restaurants are given two options of pricing in their menu. It includes:

  • VAT inclusive to the prices
  • VAT exclusive by giving a footnote of 5% standard rate.

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