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FAQ

FAQ Overview

  • VAT Basics
  • VAT Registration
  • Import
  • Exports
  • Excise Tax

Frequently Asked Questions

If you have any concerns please read this collection of frequently asked questions before contacting us. If you are still unclear about something feel free to contact.

1What is Value Added Tax (VAT)?

Value Added Tax (or VAT) is an indirect tax applied on the consumption of most goods and services. It is also referred to as a type of general consumption tax. It is imposed on a product at each stage of production before the final sale. At each stage in the supply chain, businesses collect VAT on behalf of the government. Because it is added to the customer’s purchase price, ultimately it is the end consumer who pays VAT.

2Why is UAE implementing VAT?

One of the main reasons for implementing VAT in UAE is to generate more revenue for the government. Using this revenue, the Government plans to offer various types of public services, including medical facilities, good roads, transportation facilities, public schools, parks, waste control, and more. VAT will also provide a new source of non-oil revenue for the Emirates.

3How will VAT affect one’s cost of living?

Each person’s cost of living is affected by their lifestyle, so the impact of VAT will vary between individuals. There will probably be a slight increase in overall cost of living, but a person who spends mostly on exempt and zero-rated things will not see much increase.

4When will VAT go into effect?

The Federal Tax Authority has decided to introduce VAT in the UAE by 01 January 2018.

5Will VAT be applicable for tourists?

The short answer is yes. The travel and tourism industry is an important part of the UAE’s national economy.
Not all parts of the industry will be subject to the same VAT rates, though. The travel and tourism sector can be broken down into several components, such as luxury, medical, education, meetings, exhibitions, healthcare, education, events and other special interest groups. It is expected that healthcare and education will be zero-rated supplies in the UAE. Meetings, conferences, events, and trade expos, which account for a significant portion the revenue-generating drive of the tourism sector, will be taxable.
Currently, the UAE is doing a feasibility study of a Tourist Refund Scheme where visitors and tourists will be able to claim a refund on VAT paid on certain goods and services purchased in the UAE.

6How does VAT work?

Output VAT is the value added tax that you calculate and charge on your own sales of goods and services if you are registered for VAT. Output VAT must be charged on sales both to other businesses and to ordinary consumers. Input VAT is the value added tax added to the price you pay for eligible goods or services. If you are registered for VAT, you can deduct the amount of VAT paid from your settlement with the tax authorities.

7Who needs to register for VAT?

A business should register for VAT if their taxable supplies and imports exceed the mandatory registration threshold of 375,000 AED.
A business can also choose to register for VAT voluntarily under two conditions:

  • If the supplies and imports of the business are less than the mandatory registration threshold, but greater than the voluntary registration threshold of AED 187,500.
  • If expenses of the business exceed the voluntary registration threshold. This opportunity is designed to enable start-up businesses with no turnover to register for VAT.

    • 8What are the VAT rates?

    The proposed standard rate of VAT in the UAE will be up to 5%. Certain supplies of goods and services may be either exempt (meaning VAT will not be applicable at all), or zero-rated (meaning 0% VAT will be applied to goods and services). The standard rate will be applied to all goods and services that do not fall under an exempt or zero-rated goods and services category.

    9What sectors are zero rated?

  • Exports of goods and services to outside the GCC.
  • International and intra-GCC transport
  • Supplies for certain sea, air, and land means of transportation (such as aircraft and ships).
  • Supply of precious metals for investment (gold, silver, and platinum)
  • Newly constructed residential properties that are supplied for the first time within three years of their construction.
  • Supply of certain educational services and relevant goods and services.
  • Supply of certain healthcare services and associated goods and services.
  • Certain eatables (a standard list will be ratified across the GCC by the Financial and Economic Cooperation Committee)
  • The oil sector and the oil and gas derivatives sector (at the discretion of each member state)

    • 10What sectors are VAT exempt?

  • The supply of certain financial services
  • Sale of bare land
  • Lease or sale of residential property
  • Local transport

    • Frequently Asked Questions

    If you have any concerns please read this collection of frequently asked questions before contacting us. If you are still unclear about something feel free to contact.

    1Do I need a unique VAT number for each commercial registration for the same organization?

    No, the head office and branches are considered to be a single taxable entity under VAT, provided that they are part of the same legal entity. This also applies for two branches with different commercial registrations.

    2I haven’t gotten my TRN yet. What can I do?

    Due to incorrect documents for VAT registration, many taxpayers haven’t yet received their TRN. In order to compensate for this, the FTA has provided provisional TRNs which will act as a temporary TRN until the taxpayer gets their permanent TRN. Businesses that have registered before Dec 4th, 2017 should have already gotten their provisional TRN.

    3Can I register for VAT after January 1st 2018?

    Yes, you can. Businesses registering for VAT will not face any registration penalty until April 30th 2018, but they are required to settle all the taxes due from January 1st 2018. Earlier, the deadline for VAT registration was December 4th 2017, which has been extended by the FTA to April 30th 2018. If your VAT registration fails due to incorrect documentation, you will be provided with a provisional TRN which will act as your TRN until you get a permanent one.

    4If I registered for VAT after December 4th 2017, will I face any penalty?

    No, businesses registering for VAT will not face any registration penalty until April 30th 2018, but they are required to settle all the taxes due from January 1st 2018. Earlier, the deadline for VAT registration was December 4th 2017, which has been extended by the FTA to April 30th 2018.

    5Can I use my provisional TRN in my transactions?

    Yes, you can use your provisional TRN until you get your permanent TRN from the FTA.

    6What is a Provisional TRN?

    The FTA will issue a temporary TRN number called the Provisional TRN to taxpayers who don’t get their TRN due to failure of their VAT registration (usually occurs due to submission of incorrect documents). Taxpayers can use this Provisional TRN for transactions until their registration is completed successfully and they get their TRN.

    Frequently Asked Questions

    If you have any concerns please read this collection of frequently asked questions before contacting us. If you are still unclear about something feel free to contact.

    1Are imports taxed?

    Yes, goods imported into the UAE will be subject to 5% VAT starting on January 1st, 2018.
    Note: Import of precious metals is taxed at 0%. At each stage in the supply chain, businesses collect VAT on behalf of the government. Because it is added to the customer’s purchase price, ultimately it is the end consumer who pays VAT.

    2Under what conditions are imports taxed?

    All the goods and services imported from abroad are taxed under the VAT regime.

  • If the recipient in UAE is registered under the VAT regime, they would have to pay VAT under the reverse-charge mechanism.
  • If the recipient in UAE is not registered under the VAT regime, the VAT due should be paid on the import from outside the GCC. In this case, the tax should be paid before the goods are delivered to the recipient.

    • 3When should an importer pay VAT?

    The importer is due to pay VAT as soon as they submit the tax return. The returns must be filed within 28 days after the end of the tax period in which the import happened.

    4How is VAT calculated for imported goods?

    VAT is calculated on the value of imported goods as follows: For low-value shipments (less than or equal to custom declared value of AED 1000):

  • Customs value, Insurance, Freight (CIF) x 5%
    • For high-value consignments (customs declared value exceeds AED 1000):
  • (Freight (CIF)+ Excise tax + Customs Duty + Customs Fees) x 5%

    • 5If I re-import goods to the UAE that I had previously returned to their country of origin, should I pay VAT?

    No, VAT is not applicable in this case.

    6I am a UAE national who has been living abroad. If I decide to move back to the UAE and import my used personal and household items, will I pay VAT?

    No, VAT is not applicable in this case.

    7I am a non-UAE national moving to the UAE for the first time. If I import my personal and household items, will I pay VAT?

    No, VAT is not applicable in this case.

    8Do military and internal security forces need to pay VAT when importing taxable goods into the mainland?

    No, VAT is not applicable in this case.

    9Can I recover the input tax paid on imports?

    Yes, you can recover the input tax paid on imports if you’re registered with the FTA and have a Tax Registration Number (TRN).

    10My firm is located in a free zone. Is VAT applicable on goods imported into a free zone in the UAE?

    If your firm is located in a free zone that is not listed as a designated zone, then the imports will be taxed based on their value.

    Frequently Asked Questions

    If you have any concerns please read this collection of frequently asked questions before contacting us. If you are still unclear about something feel free to contact.

    1Will VAT be paid on exports?

    Export of goods and services outside the GCC and international transportation are zero rated. They must be reported in tax returns, but no VAT will apply.

    2Under what conditions are exports taxed?

    If an export falls under any of the following conditions, it will be taxed:

  • Export of goods to a non-GCC member state
  • Export of goods to recipients in a GCC VAT implementing state
  • Export of goods requiring installation/assembly/completion outside UAE

    • 3Does the VAT treatment of exports differ based on the recipient’s VAT registration status?

    Yes, the VAT treatment differs based on the recipient’s VAT registration status.

  • If you export goods to a VAT-registered recipient, the export will be taxed at 0%.
  • If you export goods to a non-registered recipient, and if the value of the goods supplied by you to the destination state is below the mandatory registration threshold in the destination state, then the supply will be taxed at 5%.
  • If you export goods to a non-registered recipient, and if the value of the goods sent by you to the destination state exceeds the mandatory registration threshold in the destination state, then the supply will be treated as domestic supply. In this case, VAT will be applicable according to the VAT laws of the destination state and you will have to register for VAT in the destination state in this case.

    • 4Can I recover input tax on exports?

    Yes, you can recover input tax on supplies used to make exports since they are taxable supplies. If you are involved in local supply within the UAE, you can recover input tax to reduce your tax liability. Also, if you’re involved only in export of goods, then you can get a refund for the VAT paid on the inputs.

    5What documents are required to prove that my export is genuine?

    In order to prove that you export is genuine, you need all of the following documents:

  • Export documents issued by the local Emirate Customs Department regarding goods leaving the state
  • Airway bill
  • Bill of landing
  • Consignment note
  • Certificate of shipment
    • The above documents should contain the following information:
  • The name of the supplier
  • The name of the consignor
  • A description of the goods
  • The value of the goods
  • The export destination
  • The mode of transport and route that the export will take

    • Frequently Asked Questions

    If you have any concerns please read this collection of frequently asked questions before contacting us. If you are still unclear about something feel free to contact.

    1What is a supply?

    Supply refers to goods or services that are exchanged for consideration (payment). Supply occurs when there’s a transaction between two people and at least one of them is a registered taxpayer. Supply includes buying, selling and stock transfers, even if there is no exchange of money.

    2What are the types of supply?

  • Taxable supply: When a supply takes place within the UAE, it falls within the scope of the UAE VAT, and will be considered taxable supply.
  • Out-of-scope supply: When a supply takes place outside the UAE, it is outside the scope of the UAE VAT.

    • 3Do I need to pay VAT on sale or purchase of pre-owned goods?

    Yes, the Federal Tax Authority (FTA) has issued guidelines to charge 5% VAT on sale or purchase of pre-owned goods such as vehicles and furnitures. However, the amount on which VAT to be levied depends on when the item was purchased.

  • If the item was purchased before VAT was implemented (January 1st, 2018) and is sold anytime after that, the VAT needs to be applied on the total selling price.
  • If an item was purchased and sold after VAT was implemented, then VAT needs to be applied on the profit margin. The VAT will be levied on the profit margin, since the seller of the pre-owned goods would have already been taxed at the time of purchase.
  • Pre-owned goods imported into UAE doesn’t qualify for this scheme. Import of pre-owned goods are always subject to VAT on the total price.

    • 4How does VAT affect activities undertaken by employees in the course of their employment, including salaries?

    These activities and payments are out of the scope of VAT.

    5How does VAT affect supplies between members of a single tax group?

    These supplies are out of the scope of VAT.

    6What are the VAT rates for secondhand goods, antiques and collector’s items?

    Secondhand goods (including cars sold by retailers), antiques, and collections are taxed at 5% of the profit margin.

    7Is online shopping taxable?

    Yes, online shopping is taxed at 5%.

    8How is VAT calculated with discounts?

    VAT is calculated on the discounted price of the product. For example, if the price of an item is 110 AED and the seller gives a discount of 10 AED, then the VAT on the product is 5% of 100 AED. The total cost of the product would be 120 AED (100 AED purchase price + 20 AED of VAT).

    9Are loans and other processing charges subject to VAT?

    Loans are not subject to VAT under UAE, but the processing charges are subject to 5% VAT.

    10What is the place of supply?

    The place of supply is a component of supply that determines where a transaction has occurred for VAT purposes.

    Frequently Asked Questions

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    Frequently Asked Questions

    Lorem Ipsum is simply dummy text of the printing and typesetting industry. Lorem Ipsum has been the industry's standard dummy text ever since the 1500s, when an unknown printer took a galley of type and scrambled it to make a type specimen book. It has survived not only five centuries, but also the leap into electronic .

    1Section 1.10.33 of "de Finibus Bonorum et Malorum", written?

    Lorem Ipsum is simply dummy text of the printing and typesetting industry. Lorem Ipsum has been the industry standard dummy text ever since the 1500s, when an unknown printer took a galley of type and scrambled it to make a type specimen book. It has survived not only five centuries, but also the leap.Lorem Ipsum is simply dummy text of the printing and typesetting industry. Lorem Ipsum has been the industry standard dummy text ever since the 1500s.

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    Good strategy is the antidote to competition. Strategic thinking is the process of developing a strategy that defines your value proposition and your unique value chain. This process includes market and competitive research as well as an assessment of the company’s capabilities and the industry forces impacting it.

    4Contrary to popular belief, Lorem Ipsum is not simply random text. It has roots in a piece of classical?

    Lorem Ipsum is simply dummy text of the printing and typesetting industry. Lorem Ipsum has been the industry standard dummy text ever since the 1500s, when an unknown printer took a galley of type and scrambled it to make a type specimen book. It has survived not only five centuries, but also the leap.

    5There are many variations of passages of Lorem Ipsum?

    Good strategy is the antidote to competition. Strategic thinking is the process of developing a strategy that defines your value proposition and your unique value chain. This process includes market and competitive research as well as an assessment of the company’s capabilities and the industry forces impacting it.

    6 If you are going to use a passage of Lorem ?

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    7Section 1.10.33 of "de Finibus Bonorum et Malorum”?

    Lorem Ipsum is simply dummy text of the printing and typesetting industry. Lorem Ipsum has been the industry standard dummy text ever since the 1500s, when an unknown printer took a galley of type and scrambled it to make a type specimen book. It has survived not only five centuries, but also the leap.

    Frequently Asked Questions

    Lorem Ipsum is simply dummy text of the printing and typesetting industry. Lorem Ipsum has been the industry's standard dummy text ever since the 1500s, when an unknown printer took a galley of type and scrambled it to make a type specimen book. It has survived not only five centuries, but also the leap into electronic .

    1Section 1.10.33 of "de Finibus Bonorum et Malorum", written?

    Lorem Ipsum is simply dummy text of the printing and typesetting industry. Lorem Ipsum has been the industry standard dummy text ever since the 1500s, when an unknown printer took a galley of type and scrambled it to make a type specimen book. It has survived not only five centuries, but also the leap.Lorem Ipsum is simply dummy text of the printing and typesetting industry. Lorem Ipsum has been the industry standard dummy text ever since the 1500s.

    2Lorem ipsum dolor sit amet, consectetur adipiscing elit?

    Lorem Ipsum is simply dummy text of the printing and typesetting industry. Lorem Ipsum has been the industry standard dummy text ever since the 1500s, when an unknown printer took a galley of type and scrambled it to make a type specimen book. It has survived not only five centuries, but also the leap.

    3But I must explain to you how all this mistaken idea of denouncing?

    Good strategy is the antidote to competition. Strategic thinking is the process of developing a strategy that defines your value proposition and your unique value chain. This process includes market and competitive research as well as an assessment of the company’s capabilities and the industry forces impacting it.

    4Contrary to popular belief, Lorem Ipsum is not simply random text. It has roots in a piece of classical?

    Lorem Ipsum is simply dummy text of the printing and typesetting industry. Lorem Ipsum has been the industry standard dummy text ever since the 1500s, when an unknown printer took a galley of type and scrambled it to make a type specimen book. It has survived not only five centuries, but also the leap.

    5There are many variations of passages of Lorem Ipsum?

    Good strategy is the antidote to competition. Strategic thinking is the process of developing a strategy that defines your value proposition and your unique value chain. This process includes market and competitive research as well as an assessment of the company’s capabilities and the industry forces impacting it.

    6 If you are going to use a passage of Lorem ?

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    7Section 1.10.33 of "de Finibus Bonorum et Malorum”?

    Lorem Ipsum is simply dummy text of the printing and typesetting industry. Lorem Ipsum has been the industry standard dummy text ever since the 1500s, when an unknown printer took a galley of type and scrambled it to make a type specimen book. It has survived not only five centuries, but also the leap.

    Frequently Asked Questions

    Lorem Ipsum is simply dummy text of the printing and typesetting industry. Lorem Ipsum has been the industry's standard dummy text ever since the 1500s, when an unknown printer took a galley of type and scrambled it to make a type specimen book. It has survived not only five centuries, but also the leap into electronic .

    1Section 1.10.33 of "de Finibus Bonorum et Malorum", written?

    Lorem Ipsum is simply dummy text of the printing and typesetting industry. Lorem Ipsum has been the industry standard dummy text ever since the 1500s, when an unknown printer took a galley of type and scrambled it to make a type specimen book. It has survived not only five centuries, but also the leap.Lorem Ipsum is simply dummy text of the printing and typesetting industry. Lorem Ipsum has been the industry standard dummy text ever since the 1500s.

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    3But I must explain to you how all this mistaken idea of denouncing?

    Good strategy is the antidote to competition. Strategic thinking is the process of developing a strategy that defines your value proposition and your unique value chain. This process includes market and competitive research as well as an assessment of the company’s capabilities and the industry forces impacting it.

    4Contrary to popular belief, Lorem Ipsum is not simply random text. It has roots in a piece of classical?

    Lorem Ipsum is simply dummy text of the printing and typesetting industry. Lorem Ipsum has been the industry standard dummy text ever since the 1500s, when an unknown printer took a galley of type and scrambled it to make a type specimen book. It has survived not only five centuries, but also the leap.

    5There are many variations of passages of Lorem Ipsum?

    Good strategy is the antidote to competition. Strategic thinking is the process of developing a strategy that defines your value proposition and your unique value chain. This process includes market and competitive research as well as an assessment of the company’s capabilities and the industry forces impacting it.

    6 If you are going to use a passage of Lorem ?

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    7Section 1.10.33 of "de Finibus Bonorum et Malorum”?

    Lorem Ipsum is simply dummy text of the printing and typesetting industry. Lorem Ipsum has been the industry standard dummy text ever since the 1500s, when an unknown printer took a galley of type and scrambled it to make a type specimen book. It has survived not only five centuries, but also the leap.

    Reference :

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