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Pay Zero VAT on Goods & Services in UAE

Pay Zero VAT on Goods & Services in UAE



 The President, His Highness Sheikh Khalifa bin Zayed Al Nahyan, on Sunday issued the Federal Decree-Law No. 8 of 2017 for Value-Added Tax, with one of the lowest rates in the world.

Value Added Tax is the most discussed topic in GCC creating many questions. As January , 2018 is approaching very fast businesses (small and large) are interested to know steps, dos & donts, vat planning, implementation and its impact on decision making. In the application/ compliance and better understanding of the VAT law, the following terms, misunderstandings are vital to know.

Tax Rate: A standard rate of 5% shall be imposed on any supply or Import pursuant to Article (2) of this Decree-Law on the value of the supply or Import specified in the provisions of this Decree-Law.

Value Added Tax is imposed on the import and supply of Goods and Services at each stage of production and distribution, including the Deemed Supply.

However, there are certain conditions when zero VAT will be applied.

Supply of Goods and Services that is Subject to Zero Rate: The Zero rate shall apply to the following Goods and Services:

1. A direct on indirect Export to outside the Implementing States as specified in the Executive Regulation A direct or indirect Export to outside the Implementing States as specified in the Executive Regulation of this Decree-Law.

2. International transport of passengers and Goods which starts or ends in the State or passes through its territory, including also services related to such transport.

3. Air passenger transport in the State if it is considered an “international carriage” pursuant to Article (1) of the Warsaw Convention for the Unification of Certain Rules Relating to International Carriage by Air 1929.

4. Supply of air, sea and land means of transport for the transportation of passengers and Goods as specified in the Executive Regulations of this Decree-Law.

5. Supply of Goods and Services related to the supply of the means of transport mentioned in Clause (4) of this Article and which are designed for the operation, repair, maintenance or conversion of these means of transport.

6. Supply of aircrafts or vessels designated for rescue and assistance by air or sea.

7. Supply of Goods and Services related to the transfer of Goods or passengers aboard land, air or sea means of transport pursuant to Clauses (2) and (3) of this Article, designated for consumption on board; or anything consumed by any means of transport, any installations or addition thereto or any other use during transportation.

8. The supply or Import of investment precious metals. The Executive Regulation of this Decree- Law shall specify the precious metals and the standards based on which they are classified as being for investment purposes.

9. The first supply of residential buildings within (3) years of its completion, either through sale or lease in whole or in part, according to the controls specified in the Executive Regulation of this Decree-Law .
10. The first supply of buildings specifically designed to be used by Charities through sale or lease according to the controls specified in the Executive Regulation of this Decree-Law.

11. The first supply of buildings converted from non-residential to residential through sale or lease according to the conditions specified in the Executive Regulation of this Decree-Law.

12. The supply of crude oil and natural gas.

13. The supply of educational services and related Goods and Services for nurseries, preschool, elementary education, and higher educational institutions owned or funded by Federal or local Government, as specified in the Executive Regulation of this Decree-Law.

14. The supply of preventive and basic healthcare Services and related Goods and Services according to what is specified in the Executive Regulation of this Decree-Law.

Supply Exempt from Tax: The following supplies shall be exempt from Tax:

1.  Financial services that are specified in the Executive Regulation of this Decree-Law.

2.  Supply of residential buildings through sale or lease, other than that which is zero-rated according to Clauses (9) and (11) of Article (45) of this Decree-Law.

3.  Supply of bare land.

4.  Supply of local passenger transport.


The Executive Regulation of this Decree-Law shall specify the conditions and controls for exempting the supplies mentioned in the preceding clauses of this Article.


HOW WE CAN HELP
Our Indirect Tax Team of experts is available in GCC Region to discuss and bring clarity to the specific challenges that your businesses might face in getting yourself ready for VAT. Please contact our indirect tax executives to learn more.

LinkedIn: Waheed Ensari

VAT Consultancy Services
VAT Advisory and Consultancy services are available for GCC (Gulf Cooperation Council) Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the United Arab Emirates

To know more whatsapp +971 55 8400399 | email: info@thebscon.com

Take on VAT Readiness Survey here

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Location: Dubai - United Arab Emirates

Comments

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