UAE VAT for Salons: Registration, Tax Invoices, Packages and Penalties

Once your salon is registered, every service and product you sell in the UAE carries 5% VAT. This guide covers when to register, what your menu and bills must show, how packages and vouchers are taxed, what you can claim back and the penalties that catch salons out, with worked numbers in AED.

Rules as they stood on 3 November 2026, from the VAT Decree-Law, its Executive Regulation and the Federal Tax Authority's (FTA) penalty table. This is not tax advice: confirm anything that affects your returns with an FTA-registered tax agent.

#What is the VAT rate on salon services in the UAE?

Salon services and retail products are taxed at the standard rate of 5%, in force since 1 January 2018 under Federal Decree-Law No. 8 of 2017. There is no reduced rate for hair, beauty, nails, spa or barbering, and products used up during a service are part of that service.

The healthcare zero rate doesn't reach cosmetic work. Article 41 of the Executive Regulation excludes "elective treatment for cosmetic reasons" unless a doctor or medical professional prescribes it to treat or prevent a medical condition. If you also run a clinic, ask your tax agent which services, if any, qualify.

#When does a salon have to register for VAT?

You must register when taxable supplies over the previous 12 months exceed AED 375,000, or when you expect them to exceed it in the next 30 days. Apply within 30 days (Article 7 of the Executive Regulation). Registration is free on EmaraTax, the FTA's online platform.

• It is a rolling test. At every month end, add up the last 12 months of service and product sales.
• The FTA registers you anyway. Cross the line on past sales and you are registered from the first day of the next month, whether or not you apply.
• One person, one registration. A person in business holds one tax registration number, so all your outlets count together, and the FTA can add together the sales of related businesses that were split artificially (Article 13).

Should a salon register voluntarily?

You may register once taxable supplies or taxable expenses pass AED 187,500 over the previous 12 months, or are expected to in the next 30 days. Because expenses count, a large fit-out can make a new salon eligible before it opens. VAT paid before registration can be recovered on your first return if those goods and services are used for taxable sales afterwards (Article 56 of the Decree-Law); ask your tax agent which pre-opening costs qualify.

The trade-off: most of your clients are individuals who simply pay 5% more, you file a return every quarter, and you can't deregister for 12 months after registering voluntarily (Article 23).

#Do salon prices have to include VAT?

Yes. Published prices must include VAT (Article 38 of the Decree-Law, Article 27 of the Executive Regulation), so your menu, booking page and social posts show what the client pays. Not displaying VAT-inclusive prices carries an AED 5,000 penalty. You may quote prices before VAT only to VAT-registered customers, such as a hotel, clearly marked as excluding VAT.

• VAT inside a VAT-inclusive price = price ÷ 21 (the same as 5/105)
• Value before VAT = price × 100 ÷ 105, with the tax rounded to the nearest fils

Price from the figure before VAT, then add 5%

Work out what a service must earn before VAT, add 5% and round the menu price. The calculator below assumes AED 60,000 of monthly fixed costs, 4 chairs open 10 hours a day for 30 days with half the chair time sold, and a 60-minute service using AED 25 of product, with 10% commission, 2% card fees and a 20% margin.

On those assumptions the target is AED 184 before VAT and AED 193 with it, so the menu says AED 195: AED 9.29 of VAT and AED 185.71 for you. Pay commission on the AED 185.71. Our guide to pricing salon services explains each input.

"VAT-free" offers

You can't advertise a service as VAT-free. Under the FTA's Public Clarification VATP020, a "we pay the VAT" offer is a discount, and VAT is worked out on what the client actually pays. A AED 315 facial offered at AED 300 carries 300 ÷ 21 = AED 14.29 of VAT, and you have given AED 15 off, so advertise it as AED 15 off.

#What must a salon's tax invoice show?

Walk-in clients get a simplified tax invoice and VAT-registered businesses get a full one; Article 59 of the Executive Regulation sets out both. A simplified invoice is allowed when the client isn't registered, or is registered and the bill is AED 10,000 or less, and it must be issued on the day of the service. A full tax invoice is due within 14 days of the date of supply (Article 67 of the Decree-Law).

A full tax invoice adds the client's name, address and TRN, a sequential or unique number, the date of supply if different, the unit price, quantity, rate and amount for each line, any discount, and the gross amount and VAT in AED.

Electronic invoices, such as a bill sent to the client's phone, are allowed if you can store a copy securely and the content can't be altered (Article 59(8)). Issue a tax credit note for every refund: a missing tax invoice or credit note costs AED 2,500 for each case found.

E-invoicing. Ministerial Decision No. 244 of 2025 keeps sales to consumers outside the e-invoicing system until the Minister decides otherwise. If you also bill businesses, such as hotels or event companies, and your revenue is under AED 50 million, it sets two deadlines: appoint an accredited service provider by 31 March 2027 and go live by 1 July 2027.

#How is VAT charged on packages, memberships, deposits and gift vouchers?

VAT on a service is due at the earliest of completing it, receiving payment or issuing a tax invoice (Article 25 of the Decree-Law), to the extent of what was paid (Article 19 of the Executive Regulation). So money taken in advance is taxed when it comes in. Gift vouchers sold at face value are the exception.

Vouchers need care. The Executive Regulation treats an instrument as a voucher only if its money value is known when it is issued, so a voucher for "one 60-minute massage" may be closer to a prepaid service. The FTA hasn't published a voucher clarification for salons, so agree your treatment with your tax agent, including vouchers that expire unused. Do the same for retained deposits and no-show fees, which our guide to a salon no-show policy helps you set.

#How do discounts and free gifts work?

Take the discount off first, then work out VAT on what the client pays: a discount you fund reduces the value of the supply (Article 39 of the Decree-Law, Article 28 of the Executive Regulation). On 20% off a AED 400 colour, the client pays AED 320 and the VAT is 320 ÷ 21 = AED 15.24. Working out VAT on the AED 400 first overstates it by AED 3.81.

Free product samples and gifts are not a deemed supply if they are worth no more than AED 500 per recipient over 12 months (Article 12(4) of the Decree-Law, Article 5 of the Executive Regulation). Ask your tax agent about anything above that, and about any regular programme of free services.

#What VAT can a registered salon recover?

You can recover the VAT on costs used to make taxable sales (Article 54 of the Decree-Law): commercial rent from a VAT-registered landlord, stock, backbar products, equipment, fit-out, software and marketing. You need a valid tax invoice and must have paid for the purchase (Article 55).

Article 53 of the Executive Regulation blocks three kinds of cost: entertainment for anyone who isn't your employee, including clients; vehicles available for personal use; and staff benefits for personal use, unless the law, the contract or a documented policy requires them. Cabinet Decision No. 149 of 2026 adds a fourth: cash payments above a threshold the Minister of Finance will set. Until that threshold is published, pay suppliers by bank transfer or card.

#How often does a salon file VAT returns?

Most salons file quarterly. The standard tax period is three months (Article 62 of the Executive Regulation), and businesses with turnover under AED 150 million are generally on quarterly periods. The return and the payment must reach the FTA within 28 days of the end of the period. Keep invoices, credit notes and your tax record for five years after the tax period they relate to, and four years longer during an audit or a dispute (Cabinet Decision No. 74 of 2023).

#What are the VAT penalties for salons?

These come from Cabinet Decision No. 40 of 2017 as amended by Cabinet Decision No. 129 of 2025, in force since 14 April 2026.

The 14% annual rate replaced the earlier late-payment charges on 14 April 2026. If a late payment straddles that date, ask your tax agent which rules apply to which months.

#Does a salon also need to register for corporate tax?

Usually yes, even if it pays nothing. Corporate tax applies from the first financial year starting on or after 1 June 2023: 0% on taxable income up to AED 375,000 and 9% above it. That is a test of profit, not of sales like VAT's AED 375,000.

• A company set up on or after 1 March 2024 must apply within three months of incorporation (FTA Decision No. 3 of 2024). Registering late costs AED 10,000.
• An individual trading in their own name is in scope only if business turnover exceeds AED 1 million in a calendar year, and must then register by 31 March of the following year.
• Small Business Relief lets a business with revenue of AED 3 million or less, in the current and every previous tax period, be treated as having no taxable income, for periods ending by 31 December 2029 (Ministerial Decision No. 131 of 2026). You must elect it and still file a return within nine months of the period end. A Qualifying Free Zone Person can't use it.

#A quarterly VAT checklist

Pay commission on the value before VAT, as covered in salon commission structures. If you are still setting up, see where VAT and corporate tax fit in our guide to opening a salon in Dubai.