VAT in UAE
GCC countries have decided to implement Value Added Tax in the entire region through a treaty signed by all member countries. UAE has already implemented the VAT laws and regulations with effect from January 1, 2018, along with the Kingdom of Saudi Arabia.
The introduction of Value Added Tax (VAT) in UAE, a traditionally Tax-free jurisdiction, brings with it a lot of opportunities and an equal amount of challenges. Our team of thriving VAT specialists is well equipped to help your business overcome expected roadblocks such as lack of familiarity with VAT rules & regulations, structure and compliance issues, lack of resources (availability of experts and competent staff) and lack of a robust bookkeeping system.
Everything you need to know about VAT
If your annual turnover exceeds the mandatory threshold limit of AED 375,000, then you are liable to pay tax.
Optional registration threshold limit is AED 187,500/- per year, where, any business person can voluntarily register for VAT and continue with the normal compliance process.
Rates of VAT:
The types of rates applicable are:
- Standard rate
The businesses registered under UAE VAT will be levied 5 percent tax.
- Zero rate
- Exports of goods and services outside the UAE
- International transportation, and related supplies
- Supplies of certain sea, air and land means of transportation (such as aircrafts and ships)
- Certain investment grade precious metals (e.g. gold, silver, of 99% purity)
- Newly constructed residential properties, that are supplied for the first time within 3 years of their construction
- Supply of certain education services
- Supply of certain Healthcare services
Areas exempted from VAT
- Supply of certain financial services
- Residential properties – sale and lease
- Bare land – sale and lease
- Local passenger transport
Out of scope transactions for VAT:
These are mostly high sea sales kind of transactions wherein a UAE distributor ships goods from one country to another directly, which doesn’t involve any direct involvement with UAE. Such type of transactions are out of scope for VAT and need not follow the registration and compliances.
HLB HAMT offers services for VAT on:
- Building and sharing knowledge on VAT
- Helping in bringing the VAT expertise in the industry
- Assessing current capability of the business to manage VAT
- IT re-configuring in line with the laws and regulations of VAT
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