Output VAT is not income — it belongs to the FTA. Treating it as revenue is one of the most costly cash flow errors a UAE business can make. The mechanics: you collect 5% on every taxable sale, hold those funds, deduct your input VAT for the period, and pay the balance to the FTA — typically quarterly. If your quarterly output VAT collection is AED 50,000 and your input VAT is AED 30,000, you owe the FTA AED 20,000.
Watch out: If you spend the VAT collected before the quarterly filing date, you will face a cash shortfall at filing. A separate VAT holding account is a practical safeguard.
See also: Input VAT, VAT Return, Tax Registration Number (TRN)
