Value Added Tax (VAT) came into effect from January 01, 2018 and VAT is very new for the people of UAE. The sharp drop in the oil prices left no option for the GCC countries other than to look at the taxation model.
At the end of each tax period, VAT registered businesses must submit a VAT return UAE and also claim a VAT Refund Dubai, UAE.
After VAT implementation, there are a lot of questions popping up in the minds of the people regarding VAT return UAE and VAT Refund Dubai. SAB is a certified tax agent in UAE and will gladly help you in understanding the VAT system. SAB will answer the most asked questions and if you have any questions regarding VAT in UAE.
Now the VAT is rolling in UAE, it is must for all the businesses to file VAT Return UAE. Get in touch and feel free to ask.
1. Is VAT applicable to shipping services, if invoiced within the UAE?
It would be zero rated but it is not exempted.
2. How is VAT applied when customers exchange old gold ornaments for new?
If customer is not a taxable person, VAT would apply on value of new ornaments. If customer is a taxable person, VAT would apply on both exchanges.
3. How is VAT applied on sale of used cars?
No, VAT if the vehicle is sold by an end user of the car however VAT is applicable if sold by a company or business which sells used cars.
4. If we are zero rated, how we can convey our suppliers and customers that we have zero rated products. Can we get any document/certificate from FTA showing we are Zero rated?
You as a person cannot be zero rated. Your specified goods and services can be. You can convey it to your customers and suppliers through reference to relevant articles of the Law published by Federal Tax Authority (FTA).
5. We get jobs on long term/short term contract on daily hire rate basis. Billing will be once in a month. Is there any rule to issue invoice every 14 days, or can we continue with our current monthly billing?
For daily supplies one tax invoice can be issued. Such invoice shall include summary of all supplies made and should be issued in same calendar month.
6. Will my children’s school tuition fees be affected by VAT?
No, VAT will not affect the children’s school tuition.
7. Will VAT impact school expenses like bus fare, uniforms and text books?
Yes, VAT is applicable on uniforms, text books and stationery. However, bus fare is an exempt category.
8. Would all shopping of clothes, bags, shoes and other outfit essentials be subject to VAT?
Yes, all the above mentioned products will subject to VAT by 5%.
9. Will my morning coffee cost 5 per cent higher with VAT?
10. Will my gold purchases be affected by VAT?
On gold jewelry and coin purchase you pay VAT.
11. Will my residential rent be higher with VAT?
No, residential rents are zero rated.
12. For expats, will sending money home cost more with VAT?
Yes, it will be 5% VAT on sending money to home.
13. Will my flight tickets be more expensive with VAT?
No, there is no VAT on flight tickets. Hurrah!
14. Would I be charged VAT for online shopping on sites such as Souq, ebay or Namshi?
Yes, 5% VAT will be charged while doing digital shopping. (No way out, Huh!)
15. Will my optics expenses comes under the purview of VAT?
Yes, FIVE PERCENT!!!
16. Will my petrol be taxed?
Yes, YOUR petrol will be taxed.
17. Will prepaid phone recharge cards have VAT added to the price?
Yes, It’s time to make less and short calls.
18. Our rent notice renewal amount is the same as for next year amount 100,000, would it become 105,000?
No, if you are asking about a residential property.
19. Will VAT applied to the revenues of my newly opened company?
No, VAT is a consumption tax and applicable only to the supplies you make.
20. I am renewing the car insurance in December and as of now no VAT is applied on my premium, can the insurance company charge me the VAT in January for the premium I paid in December 2017?
No, VAT is applicable only from January 1, 2018.
21. How about salary; is there VAT or any other tax on salaries?
No, there will be no VAT or any other tax on salaries.
22. Do I have to pay VAT on university fees?
Yes, if the university is privately owned and/or funded. (Time to pass all the exams)
23. Do we need to pay VAT on existing car loans?
No, loans are in the category of exempt.
24. Will VAT apply on rents also and parking in the building?
No, VAT is not applicable on residential rents. If the parking fee is charged separately, you have to pay VAT.
25. Will metro, tram and bus fares be higher for each trip with VAT?
26. Would resident healthcare and pharmacy costs based on co-payment be higher with VAT?
No, as long as they are basic healthcare services. Also it depends on the health service provider.
27. Will my ATM transactions be affected by VAT?
No, they will not.
28. Will getting a driver’s licence (including classes and tests) cost more once VAT comes into force?
Yes, VAT of 5% will be charged in all the processes of getting a driver’s licence.
29. Will all my tech purchases and services be subject to tax?
Yes, tech purchases as well as services will be subject to VAT.
30. Will going to the cinema cost more once VAT is rolled out?
Yes. (it’s time for torrent)
31. Would salon and spa services be affected by VAT?
Yes by 5%.
32. Will selling my property in the UAE be affected by VAT?
No, there will be no VAT if the property is residential.
33. Will hotel stays have VAT added to the final bill?
34. Will going to theme parks and family entertainment venues in the UAE such as Dubai Safari Park, Dubai Parks and Resorts, Ferrari World, Aqua venture, Wild Wadi, cost more with VAT?
Yes, it will be 5% but don’t miss the fun.
35. Will buying or selling used cars come under the purview of VAT?
36. I am getting married in Dubai; will wedding venues charge VAT for the rent of the space in 2018?
Yes and congratulations!!
37. Is a gym membership going to be more expensive from January 1?
Yes, 5% VAT on 6-packs!
38. Do I pay VAT on bank loans?
No, there will be no VAT on bank loans.
39. Do I pay VAT on credit card fees?
Yes, 5% VAT on credit card fees.
40. Do display prices of retailers include VAT?
Yes, but retailers have to issue invoices specifying the VAT rate and the actual VAT charged on the product in Dirham.
41. When we export, do we have to add VAT?
Yes, as long as it is exports to the GCC implementing states. If not, then zero per cent VAT tax rate applies.
42. If in January 2018 we have unpaid invoices of the previous year, will the government charge VAT on those?
This actually depends on the date of the invoice was issued.
43. My turnover in last 12 months are below AED 187,500, do I have to register for VAT?
No, you do not have to register as your annual turnover is below than the required threshold.
44. Do gents salons and laundries need to register for VAT?
Yes, If their annual turnover is more than AED 375,000 then they must register for VAT.
45. Do contracting/construction companies required to register?
Yes, If their annual turnover is more than AED 375,000 then they must register for VAT.
46. Can a company claim VAT refund on a car provided to employee for personal use?
No, they cannot. As per article 53 (1) (b) of executive regulation, which indicates that if such cars are available for personal use, input credit is non-recoverable. Whether such car is part of employment contract or not, doesn’t matter in this case.
47. Can a company claim VAT refund on golf membership paid for senior management?
It depends, As per article 53(1) (c), these are not recoverable input credits. For sub clause 2 of same article, both conditions should be met; (a) normal business practice and (b) to perform the role. Whereas normal business practice requires reference to industry and not the individual bank policy, proving that it is required to perform the role of a banker, looks unreasonable. Also, provision in the employment contract is not necessary as a business practice.
48. I own two commercial properties, combined rent income is AED 350,000. Will I have to charge vat to the tenants?
Yes, you have to charge VAT.
49. Can companies claim refund on VAT on medical insurance premium paid?
Yes, they can claim the VAT refund.
50. I own 2 flats in Dubai and I want to sell one of the flats. Is VAT applicable for this?
No, If it is a residential flat then VAT is not applicable.
51. Are building maintenance charges subject to VAT?
Yes, building maintenance charges are subject to 5% VAT.
52. Is VAT applicable on commissions paid to real estate agents?
53. Is sale of bare land subject to VAT?
No, it is zero-rated.
54. If I supply only zero rated goods and services, should I register for VAT?
As a supplier, you must register for VAT if your taxable turnover, including zero–rated supplies exceeds the threshold of Dh 375,000.
55. Are personal imports such as mementoes, dress, food items brought from abroad as personal baggage going to be taxed under VAT?
No, they will not subject to VAT.
56. I’m buying a residential property in Dubai, which is 5 years old, do I have to pay VAT?
No, there is no VAT on residential properties.
57. Can VAT be charged on interest on credit card purchases?
No, interest from credit cards are in exempt category.
58. We are a logistics company exporting goods to outside UAE. We send goods to outside UAE other than GCC countries. Is VAT applicable on freight invoice to UAE customers for exporting goods?
It would be zero rated.
59. Can exporters claim input vat for the expense such as transportation, fuel charges and other expense incurred for this export?
Yes, they can.
60. Can companies claim back VAT paid for petrol bills of company-owned vehicles?
Yes, for commercial vehicles. but not for motor vehicles which are available for personal use.
61. We are holding a professional license and we are not generating any invoices from this. Our head office is in Zurich, we contact our customers in GCC to provide product information and offers. Do we have to register for VAT?
Yes, if total value of supplies exceeds AED 375,000. Even if you were not generating invoices, the money paid to you by your foreign Head Office has to be considered for the purpose of the limit.
62. I am a trader. I have brought materials from Europe and I am supplying to UAE customer on 27th December with delivery note and invoice. But payment terms is 60 days from the date of delivery. Do I need to charge 5 per cent VAT for this items? If yes can I revise the invoice with 5 per cent VAT?
This transaction is not subject to VAT. So, you do not have to charge for VAT.
63. Is VAT applicable on international shipping services to transport to UAE based customers but billed outside the UAE?
It would be zero rated.
SAB is a well known Tax Agent in UAE, we are always updating ourselves with the latest news and updates of the law.
It will not be always possible for the companies and businesses to look after the tax affairs and tax matters and resolve it with the (FTA) by itself. It is necessary for the companies to appoint a tax Agent UAE to handle tax matters.
SAB are registered Tax Agents by FTA and approved audit firm in Dubai by Ministry of Economy. SAB is also offering other financial services such as: