What is VAT?
VAT or Value Added Tax was introduced January 1 of this year.
What is the applicable rate in the UAE?
The VAT rate is 5 percent which will provide the UAE with another source of income to ensure that high-quality social services can be provided to its citizens. VAT helps the UAE government to avoid being dependent on oil and other hydrocarbons as a source of income.
What are the products and services exempt of UAE?
The VAT is applied on goods and services that are not VAT exempt and zero-rated. In the UAE, all fee-based financial services are taxable while margin-based ones are exempt. Non-life insurance and taxable while the taxable ones are exempt. All food items are taxable while specified services in Health and Education are zero-rated. In terms of real estate, residential rental and bare land are exempt while new housing is zero-rated. Other real estate properties are taxable. Local transport, on the other hand, is exempt while specified oil and gas products are zero-rated as well as international transport.
What are the criteria to register for UAE in the UAE?
It is necessary for a business to register for value added tax if the value of its imports and services exceeds AED 375,000 per annum. A VAT is optional for businesses whose value of imports and services exceeds AED 187,500 per annum. A business house pays the government the tax that it collects from all its customers. The same business house also receives a refund from the government for the tax that it paid to the suppliers. Foreign businesses may also receive a refund for the VAT that they incur if they visit the UAE.
How to register for VAT in the UAE?
Businesses will be able to register for value added tax through the e-services section of the Federal Tax Authority (FTA). They, however, are required to create an account. After you created an account in e-services, you can simply go to the FTA site and click on the Login button. You can type in your username and password and undergo an alphanumeric verification. When you are already logged in to the site, you will be asked to press Register for VAT to start the entire registration process.
How Vat is collected?
VAT-registered businesses collect the 5 percent VAT on behalf of the government from all the goods and services that they buy in the UAE. They will be taxed in every step of the process. Tourists will also be asked to pay VAT at the point of sale.
How to fill VAT declaration?
Taxable businesses should file VAT returns with the FTA regularly. It is usually within 28 days of the end of the tax period which is defined for every business. The tax period is a particular period of time in which the tax must be calculated and paid.
How can businesses recover VAT?
It is expected that within the UAE VAT will be refunded to non-resident businesses not registered or not required to register for VAT which does not have any supplies acquired within the UAE. Currently, it is not expected for Dubai or the UAE to have a tourist refund scheme but it may change later on.