VAT on limousine service in the UAE: what finance teams should know

Is chauffeur service subject to VAT in the UAE?

The standard VAT rate is 5%. Whether it applies to a chauffeur invoice depends on the trip, not on the word “chauffeur”.

The Federal Tax Authority (FTA) legal text sets three outcomes for passenger transport:

• Exempt: local passenger transport between two places in the UAE.
• Zero-rated: passenger transport between the UAE and a place outside it.
• Standard-rated at 5%: supplies that fit neither group, such as a sightseeing hire.

Exempt and zero-rated both mean no VAT on the invoice. They differ for the supplier: a zero-rated supplier can still recover its own input VAT, an exempt one generally cannot. That is why the same Dubai operator may describe two trips differently.

This guide explains the rules for finance teams. It is not tax advice. Confirm the treatment of your own trips with the operator and your adviser.

What does the local passenger transport exemption cover?

Article 45 of Cabinet Decision No. 52 of 2017 exempts the supply of local passenger transport from a place in the UAE to another place in the UAE. The vehicle must be a “qualifying means of transport”, which includes a taxi, bus or other motor vehicle designed or adapted for passengers.

The same article carves out pleasure trips. Transport is not exempt where the way the trip is held out shows its main aim is sightseeing, catering or other entertainment.

So an airport transfer from DXB Terminal 3 to a Business Bay office sits comfortably in the exempt group. A half-day city sightseeing hire is the case that needs care. The wording of the booking matters, and so does how the operator presents the service. Ask the operator to state its treatment before the first invoice.

For how invoices fit into an account, see the corporate chauffeur account guide.

Are trips to Oman, Saudi Arabia, Qatar or Bahrain zero-rated?

Article 33 zero-rates passenger transport from a place in the UAE to a place outside the UAE, and from a place outside to a place in the UAE. It also covers a UAE leg that is part of an international journey, where either the first departure point or the final destination is outside the UAE.

A Dubai to Muscat transfer starts in the UAE and ends in Oman, so it falls inside that wording. The same logic reads across to Doha, Manama and Riyadh. The FTA’s sector table lists international passenger transport, including to other GCC states, at zero per cent.

Keep the booking record showing both ends of the journey and the dates. Our cross-border chauffeur cost guide covers the practical side, and the intercity transfers pages list the domestic routes for comparison.

Is VAT charged on Salik and Darb tolls passed through to you?

Salik confirmed that from 1 June 2026 it adds 5% VAT to each toll charge and to the tag activation fee. The tariffs themselves did not change. A Dubai weekday peak crossing is therefore AED 6 plus VAT. Our Salik guide lists the gates and hours.

How the operator shows this to you is a billing choice. Some quotes fold tolls into the price. Others show them as a line. Ask which, and whether VAT appears on that line. This guide has not confirmed the VAT position of Abu Dhabi’s Darb tolls, so ask the operator for its treatment in writing.

What must a valid tax invoice show?

Article 59 lists the particulars. A full tax invoice shows:

1. The words “Tax Invoice”.
2. The supplier’s name, address and Tax Registration Number (TRN).
3. Your name, address and TRN, if you are a VAT registrant.
4. A sequential or unique invoice number.
5. The issue date, and the supply date if different.
6. A description of the service.
7. For each line, the unit price, quantity, VAT rate and amount in AED.
8. Any discount, the gross amount and the VAT amount in AED.

A simplified tax invoice is allowed when the recipient is not a registrant, or when the consideration is AED 10,000 or less. A wholly zero-rated supply may not need a tax invoice if enough records exist to show the details. Check the TRN on the FTA website before you pay.

Can your company recover input VAT on staff transport?

Recovery depends on whether VAT was charged at all. If the operator’s supply is exempt or zero-rated, the invoice carries no VAT, so there is nothing to claim. Where VAT is charged, the rules on business purpose apply. This guide has not confirmed an FTA position on staff transport as an employee benefit, so we do not state one. Put the question to your adviser, with your real trip pattern.

When should you ask a tax adviser?

Ask early in these cases:

• A contract mixes local trips, sightseeing and cross-border legs.
• A travel agent or DMC resells the service. Our white-label transfers guide explains that chain.
• Finance needs a written position before a budget is signed off.

Corporate and trade clients can send invoice requirements through the corporate page and the travel trade partners page. For how this sits beside price models, see the pricing models guide and the corporate ground transport guide.