UAE to achieve non-oil foreign trade targets early: Sheikh Mohammed
His Highness Sheikh Mohammed bin Rashid Al Maktoum, Vice President and Prime Minister of the UAE and Ruler of Dubai, has expressed confidence that the country will achieve its non-oil foreign trade targets four years ahead of schedule.
"Our goal to grow non-oil foreign trade to AED 4 trillion by 2031 will be achieved within the next two years; four years ahead of schedule," he wrote on social media X.
Sheikh Mohammed highlighted that the UAE's non-oil foreign trade "saw growth of 18.6 per cent year-on-year in the first quarter of this year, reaching AED 835 billion (global average is 2-3 per cent)".
He added that the "nation's non-oil exports experienced exceptional growth, surging by 41 per cent annually".
Sheikh Mohammed reaffirmed that the UAE, under the leadership of President His Highness Sheikh Mohamed bin Zayed Al Nahyan, continues its remarkable progress across all sectors.
"Indicators of social, economic, and strategic stability and prosperity are at their highest historical levels. We are confident in an even brighter future, driven by the focused efforts of thousands of dedicated teams working to realize the UAE's global ambitions," he added.
مؤشراتنا التنموية الجديدة في دولة الإمارات 🇦🇪:
- ارتفاع تجارتنا الخارجية غير النفطية 18.6% على أساس سنوي في الربع الأول من هذا العام(المتوسط العالمي 2-3% )
(بلغ حجمها في الربع الأول من العام الحالي 835 مليار درهم )
- صادراتنا غير النفطية نمت بشكل استثنائي بلغ 41% على أساس…
— HH Sheikh Mohammed (@HHShkMohd) June 15, 2025
The UAE's non-oil foreign trade continued an upward trajectory in Q1 of 2025 (January 1 to March 31), reaching AED 835 billion, an 18.6 per cent increase compared to Q1 2024.
UAE non-oil exports continued to achieve historical growth rates, recording AED 177.3 billion in Q1 2025, a 40.7 per cent year-on-year increase (compared to Q1 2024) and a 15.7 per cent quarter-on-quarter increase (compared to Q4 2024).
This robust growth propelled non-oil exports to over 21 per cent of the UAE's total non-oil foreign trade for the first time in the nation's history, outpacing the growth of both imports and re-exports.
Re-exports saw a 6 per cent annual increase, reaching AED 189.1 billion. Imports grew by 17.2 per cent year-on-year, reaching AED 468.6 billion, but experienced a slight 1.7 per cent decline compared to the previous quarter (Q4 of 2024).
Trade with the UAE's top 10 trading partners continued to expand, growing by 20.2 per cent in Q1 2025, compared to 16.9 per cent growth with other countries. Trade grew with India by 31 per cent, with Saudi Arabia by more than double at 127 per cent, with Turkey by 8.3 per cent - surpassing previous records - and with China by 9.6 per cent.
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Foundational VAT Mistakes: Registration and De-registration The journey to VAT compliance begins with accurate registration and, eventually, correct deregistration. Mistakes at this foundational stage can trigger a cascade of issues. Late or Non-Registration for VAT : One of the most frequent and costly mistakes businesses make is failing to register for VAT within the stipulated timeframe or at all. Understanding Thresholds: Businesses must register for VAT if their taxable supplies and imports exceed the mandatory registration threshold of AED 375,000 in the past 12 months, or if they expect to exceed this threshold in the next 30 days. Voluntary registration is permitted for businesses whose taxable supplies and imports exceed AED 187,500. Common Error: Many businesses, especially small and medium enterprises (SMEs), either underestimate their turnover, are unaware of the rolling 12-month calculation, or simply delay the registration process, believing they have more time. 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Source: Incorrect De-registration: Just as important as registering correctly is knowing when and how to de-register. Common Error: Businesses that cease operations or whose taxable turnover falls below the voluntary registration threshold (AED 187,500) and are no longer required to be registered sometimes fail to apply for de-registration within the legal timeframe. Consequence (Penalty): Failure to submit a de-registration application within the specified timeframe (20 business days from the date they become eligible for de-registration) incurs an administrative penalty. Source: VAT Executive Regulations, Article (17) , Cabinet Decision No. (40) of 2017 on Administrative Penalties Transactional VAT Errors: Output and Input Tax These mistakes often occur in the day-to-day operations related to charging VAT on sales (Output VAT) and reclaiming VAT on purchases (Input VAT). 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Another common mistake is neglecting to account for 'deemed supplies,' which are certain business assets used for non-business purposes or transferred without consideration. Consequence (Penalty): Understating the actual tax due for a tax period, which can lead to penalties on the tax difference and fixed penalties for incorrect tax returns. Source: [VAT Law, Articles (41-47)], [VAT Executive Regulations, Articles (32-47)], FTA Guides on Taxable Supplies Incorrect Input Tax Recovery : Businesses are generally allowed to recover VAT paid on goods and services purchased for their taxable supplies. However, strict conditions apply. Common Error: Claiming Input VAT on ineligible expenses. Examples include entertainment services (e.g., hospitality for non-employees, staff parties not related to taxable supplies), certain motor vehicles (cars not used exclusively for business), or expenses incurred for making exempt supplies. Insufficient Documentation: Another prevalent mistake is claiming input VAT without holding a valid tax invoice or proper supporting documentation that meets FTA requirements. If an invoice is non-compliant, the input VAT cannot be claimed. Consequence (Penalty): Overstating recoverable tax leads to an over-recovery of tax, which essentially means an underpayment of tax due. This can result in penalties on the tax difference discovered during an audit, and if deliberate, could lead to charges of tax evasion. Source: [VAT Law, Articles (53-56)], [VAT Executive Regulations, Articles (54-58)], FTA Guide on Input Tax Documentation and Reporting Missteps Accurate and complete documentation is the bedrock of VAT compliance. Failures here are easily identifiable during an audit. Non-Compliant Tax Invoices : Tax invoices are crucial for both charging Output VAT and recovering Input VAT. They must contain specific information. Common Error: Issuing tax invoices that miss mandatory elements as per FTA regulations. These elements include: The words "Tax Invoice" clearly displayed. Name, address, and Tax Registration Number (TRN) of the Registrant (supplier). Name, address, and TRN of the Recipient (if registered). A unique sequential tax invoice number. Date of issue. Description of the goods or services supplied. Unit price, quantity, and total consideration. The VAT rate applied and the VAT amount payable in AED. Another mistake is failing to issue a tax invoice for taxable supplies at all, or incorrectly issuing 'simplified tax invoices' (which have fewer requirements) for transactions that do not meet the criteria (e.g., sales to unregistered customers under AED 10,000). Consequence (Penalty): Failure to issue a Tax Invoice or issuing a non-compliant Tax Invoice incurs a penalty of AED 2,500 for the first time and AED 5,000 for repetition. Source: [VAT Law, Article (65)], [VAT Executive Regulations, Article (59)], Cabinet Decision No. (40) of 2017 on Administrative Penalties Poor Record-Keeping : Businesses are legally required to maintain detailed records for a specific period. Common Error: Not retaining all required tax records, which include tax invoices, credit notes, debit notes, VAT returns, import/export documents, and any other relevant accounting records. Businesses sometimes fail to keep these for the stipulated 5 years (for most records) or 15 years (for records related to real estate supplies). Lack of organised, accessible, and easily auditable records is a significant compliance risk. Consequence (Penalty): Failure to keep required tax records and other information specified in the Tax Procedures Law results in a penalty of AED 10,000 for the first time and AED 50,000 for repetition. Source: [VAT Law, Article (78)], [Tax Procedures Law, Article (17)], Cabinet Decision No. (40) of 2017 on Administrative Penalties Filing and Payment Lapses These are arguably the most common and easily trackable mistakes that incur immediate penalties. Late Filing of VAT Returns : VAT returns must be submitted to the FTA electronically via the EmaraTax portal. Common Error: Missing the filing deadline, which is typically the 28th day following the end of each tax period (monthly or quarterly, depending on the business's registration). Many businesses underestimate the time required to compile all necessary data for accurate return submission. Consequence (Penalty): Failure to submit a Tax Return within the specified timeframe incurs a penalty of AED 1,000 for the first time and AED 2,000 for repetition. Source: [Tax Procedures Law, Article (20)], Cabinet Decision No. (40) of 2017 on Administrative Penalties Late Payment of VAT Due : The net VAT liability (Output VAT minus recoverable Input VAT) must be paid to the FTA by the same deadline as the return filing. Common Error: Cash flow management issues or simple oversight leading to delayed payment of the net VAT due. Consequence (Penalty): Penalties for late payment are severe and compound quickly: 2% of the unpaid tax, imposed immediately after the due date. of the unpaid tax, imposed immediately after the due date. 4% of the unpaid tax, if not paid within 7 days from the due date. of the unpaid tax, if not paid within 7 days from the due date. 1% of the unpaid tax, imposed daily after the lapse of 7 days from the due date, up to a maximum of 300% of the unpaid tax amount. Source: Cabinet Decision No. (49) of 2021 amending Administrative Penalties Errors in VAT Return Calculation / Voluntary Disclosure : Despite best efforts, errors can occur in VAT return calculations. Common Error: Understating Output VAT or overstating Input VAT, which results in an incorrect net tax liability. Businesses might also fail to promptly make a 'Voluntary Disclosure' when they discover such errors. Understating Output VAT or overstating Input VAT, which results in an incorrect net tax liability. Businesses might also fail to promptly make a 'Voluntary Disclosure' when they discover such errors. Consequence (Penalty): If an incorrect tax return results in an underpayment of tax, a fixed penalty of AED 1,000 (first time) or AED 2,000 (repetition) is imposed. Additionally, there's a proportional penalty on the tax difference: 5% of the tax difference if the error is voluntarily disclosed before FTA notification. 50% of the tax difference if the FTA discovers the error before the taxable person makes a voluntary disclosure. Higher penalties apply if the disclosure or discovery is made after the tax audit notification. If an incorrect tax return results in an underpayment of tax, a fixed penalty of (first time) or (repetition) is imposed. Additionally, there's a on the tax difference: Source: [Tax Procedures Law, Article (10)], Cabinet Decision No. (40) of 2017 on Administrative Penalties , Cabinet Decision No. (49) of 2021 amending Administrative Penalties Navigating Penalties and Staying Compliant Understanding the specific administrative penalties is crucial for appreciating the financial risks of non-compliance. 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