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Vat Services

  1. OVERVIEW OF VAT IN U.A.E
  2. Value Added Tax (VAT) has been introduced in U.A.E and is likely to be effective from 1st January 2018. Value-Added Tax or VAT is a tax on the consumption or use of goods and services levied at the point of sale. 

    Registering for VAT is mandatory for business entities whose 12 months turnover / sales exceeds AED 375,000/-Entities whose 12 month turnover exceeds AED 187.500/- but less than AED 375,000/- can also register voluntarily for VAT.

    The VAT will be charged at a standard rate of 5% unless the goods or services are exempt or charged at zero rate.

    Supplies which are exempt are not subject to VAT i.e. the businesses do not have the right to deduct the input tax paid on the corresponding purchases / expenses. Examples are –

    • Some specific financial services,
    • Local transport,
    • Bare land and
    • Residential building (other than zero rated supplies).

    In the case of Zero rated supplies businesses have a right to deduct the input tax paid on the corresponding purchases/expenses. Examples include:-

    • International transport of passengers and services related to such transport.
    • Certain supplies of means of transport and related goods and services.
    • New residential buildings
    • Newly converted residential buildings
    • Charity related buildings
    • Educational services in most cases
    • Goods and services for export.
    • Investment in precious metals
    • Healthcare services in most cases