About UAE Value Added Tax


VAT - Value added tax : it is also known as goods and services tax in some countries.

VAT is a consumption based tax imposed on the product at each stage of production before the final sale.

For instance, Bullet manufacturer:
the company is taxed on all the supplies it purchased to make and produce the bullet before selling it with customer

Then customer pays the VAT for the company incurs the cost during production process

VAT is not usually an additional price to the sale price. It is a percentage calculated on retail sale price of a product

What items will be taxed?
Non essential commodities are taxed. That mean basic food items, medicine, and school fees are non-taxable. More than hundreds of items and categories are non-taxable.

Say. if you going to buy a electronic product cost of 1000 AED then 50 AED would be charged as a VAT to customer

Business organization has to register for VAT with tax authorities three months before the launch date

 Who will be taxed?

Companies: Businesses which provide taxable goods or services with annual revenue of more than Dh375,000 will be required to register for VAT. Businesses with tax­able supplies below Dh375,000 but over Dh187,500 will have the option to register for it. Companies that provide health and education services can reclaim value added tax from the Government

Consumers: If you're buying any non-essential commodity, you're going to pay more - but at 5 per cent, you might not notice it so much. However, if you're a regular customer of sugary drinks, soft drinks, or tobacco, you'll inevitably feel the pinch - with these being subject to the highest price hikes.

Homebuyers: Property developers and the first sale of new homes will not be taxed. This means property developers will be able to claim back any VAT they have to pay from the Government.

Tenants: Residential tenants’ leases will not be taxed, but commercial tenants can expect to pay VAT. Offices, shops and other commercial property will be subject to it.

Home sellers: All sales of commercial property by VAT payers will attract VAT at a standard rate.

Importers/ re-exporters: As the GCC is a customs union, duties are only paid once at the point of entry to the area. As long as the goods are moved to their final destination within a defined period of time, duties are not payable. But this is where things get tricky. If goods are imported into the UAE, and set for re-exportation (with paperwork to prove it), they would be subject to customs duties in the UAE, but only attract VAT in their final destination. But, if the goods coming into the UAE have an uncertain final destination, VAT is also payable in the UAE. This is supposed to be reclaimable.

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