The FTA has clarified that online purchases are not VAT exempt and 5% VAT rate is applicable on all purchases made through online shopping portals just like any other purchase made through traditional outlets if the products purchased online are received within the UAE. Continue reading →
FTA relaxes VAT return dates
The FTA has changed the timeline for filing the first VAT return making it easier for companies to report and comply for VAT. This change is especially significant for SMEs which might have a harder time complying with VAT than larger companies due to less resources.
The VAT Return period has been relaxed and the FTA has provided the first VAT return period from January 1st up to May 31st and after that the filing returns will be made quarterly. The first return will need to be filed on or before June 28th and later returns from June 1st up to August 31st, September 1st up to November 30th etc. Continue reading →
UAE VAT Administrative and Tax Evasion Penalties
From January 1st, the way UAE businesses conduct their day-to-day operations and the spending habits of residents has seen a major shift as the UAE moves away from tax-free nation by levying a five per cent Value-Added Tax (VAT) on goods and services. Continue reading →
UAE Input VAT Tax Recovery Conditions
UAE VAT Implementation is right around the corner so we’re taking a look at another crucial thing for any business operating under the VAT regime to plan for – Input VAT Recovery.
Input VAT Tax is VAT levied on all taxable inputs of capital goods, raw materials, spare parts, services etc., which a business consumes or uses in its business. Continue reading →
UAE VAT Transitional Rules – Contracts/Early Invoicing and Payment
With the VAT regime coming to UAE in less than two weeks, we take a look at VAT transitional rules regarding contracts and early invoicing and payment.
Transitional Rules – Contracts
Where a contract is entered into prior to the effective date of the VAT law which concerns a supply made wholly or partly after the effective date of the VAT Law, VAT will be due on the supply taking place after the effective date of the VAT Law. If the contract does not mention VAT, the value of the supply stated in the contract shall be treated as inclusive of VAT. For example, the company selling the supply has to account for 5% VAT to the FTA on the value of the supply from the sum which is in the contract. Continue reading →
VAT Date of Supply
The date of supply for a transaction is the date on which taxes are levied on the goods and services.
Basic tax points for goods:
- Date of removal of goods (in case of supply of goods with transportation)
- Date on which goods made available to customer (in case of supply not involving transportation)
- Date of assembly/installation (supply of goods involving assembly or installation)
Basic tax point for services:
- Date on which the performance of service is complete
Special tax point: If any of the following events take place before the basic tax point, it will be considered a tax point for accounting for VAT:
- Payment is received
- Tax invoice is issued
Tax point for supply of continuous services: In case of continuous services over a period of several months or years, the time of supply will be the earlier of the receipt of payment or the issuance of the tax invoice.
Complete List of UAE VAT Taxable Goods and Services
The FTA has made an announcement regarding a complete list of Goods and Services which will be influenced by the new UAE VAT regime. Supplies in transportation, real estate and financial services industries will be mostly exempt from VAT, while government activities will be outside of scope of VAT Tax. Continue reading →
VAT Place of Supply
The place of supply is where a transaction is considered to have occurred for VAT purposes. It is determined differently for goods and for services.
Place of supply will determine whether a supply is made in the UAE or outside the UAE for VAT purposes:
- If the supply is treated as made outside the UAE: no UAE VAT will be charged
- If the supply is treated as made in the UAE: VAT may be charged
Goods: Basic rule – the place of supply is the location of goods when the supply takes place. Continue reading →
VAT Reverse Charge Mechanism
Reverse Charge is a mechanism under which the recipient of goods and services is required to pay VAT instead of the supplier, when the supplier is not a taxable entity in the member state where the supply has been made. It’s used because the VAT registered purchaser has to account for VAT in respect of supplies. It’s typically used for cross-border transactions to relieve a non-resident supplier from the requirement to register and account for VAT in the country of the purchaser. Reverse charging is meant to put local and international suppliers on equal footing. Continue reading →
VAT Taxable and Exempt Goods and Services Explained
Taxable supplies include:
Standard rated supplies – 5% VAT unless zero rated, exempt or out of scope.
Zero-rated supplies – not subject to VAT, right to an input tax deduction on the corresponding expenses. Examples:
- Export of goods and services to outside of GCC
- International air transport
- First sale of newly constructed residential property within 3 years
- Government funded education
- Preventive and basic healthcare
- Supply of crude oil or natural gas