Understanding VAT (Value Added Tax) In The UAE

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Understanding VAT (Value Added Tax) In The UAE
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What is VAT?

• Value Added Tax, or VAT, is a tax thats levied
  on consumption or use of goods and services. In
  other words, its a consumption based tax.
• VAT is charged at every stage in the supply chain
  right from the production to the final
  purchase.
• VAT is a form of indirect tax and is used in more
  than 180 countries around the world. All OECD
  countries except for the US have VAT (or a
  variation).

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how VAT works throughout a supply chain

• VAT is levied at each stage in the chain of
  production and distribution and is collected by
  businesses on behalf of the VAT authorities. VAT
  is ultimately paid by the end consumer.

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VAT rates and exceptions

• The Federal Tax Authority (FTA) has placed a
  fixed VAT rate of 5 on goods and services in the
  UAE.

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VAT rates and exceptions Zero-rated supplies

• The following supplies fall under the 0 VAT
  category
• Exports
• International passenger transport
• Transport of international goods, for instance
  containers and vessels
• Rescue aircrafts or sea vessels
• Certain medicines and healthcare devices
• Certain education services
• Visa charges
• First sale/rent of residential buildings
• Certain precious metals considered as investment

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VAT rates and exceptions Exempt supplies

• Exempt supplies are those goods and services that
  are totally exempted from VAT. The following
  supplies fall under this category
• Goods in designated free zones and financial free
  zones
• Local passenger transport
• Financial services including life insurance and
  reinsurance of life insurance
• Salaries and bonus of employees
• Bare land
• Residential buildings (except for those that are
  zero-rated)

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VAT registration in The UAE

• A business should register for VAT is broadly
  based on the value of their taxable supplies. The
  classification is as follows
• Mandatory registration
• Voluntary registration
• Non-resident registration

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Mandatory registration

• A supplier must register for VAT if the total
  value of its taxable supplies (which includes
  zero-rated supplies) and imports within The UAE
  surpasses AED 375,000 in a 12-month period, or is
  expected tosurpass AED 375,000 in the next 30
  days.

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Voluntary registration

• A supplier can also voluntarily register for VAT
  if its total taxable turnover (including
  zero-rated supplies and imports within the UAE)
  exceeds AED 187,500, either during the last 12
  months or is expected to exceed AED 187,500 in
  the next 30 days.

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Non-resident registration

• If a non-resident supplier or business entity
  makes taxable supplies within the UAE, it needs
  to register for VAT and file tax returns with the
  FTA.

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Vat Consultancy Services

• Its vital for businesses to understand
  VAT-related rules and regulations to stay
  compliant and steer clear of any legal problems.
• To make this easy and affordable, Manage My VAT
  provides comprehensive VAT Services in The
  UAE taking care of everything, from UAE VAT
  consultation and registration to filing and
  refunds in few simple steps. 

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