FAQs

VAT will be due on earlier of time of supply (that will be determined in accordance with IFRS 15) or the date of invoice. For contracting company, it will be earliest of revenue recognition (technically date of supply), invoice or receipt of payment.

You can claim if the tax invoice dedicated to your Vat-registered company. For petrol, normally a company sign up for fleet features so that they can receive company dedicated invoice

As a first step, the person shall request the FTA to reconsider its decision. Such request of re-consideration has to be made within 20 business days from the date the person was notified of the original decision of the FTA, and the FTA will have 20 business days from receipt of such application to provide its revised decision. If the person is not satisfied with the revised decision of the FTA, it will be able to object to the Tax Disputes Resolution Committee which will be set up for these purposes. Objections to the Committee will need to be submitted within 20 business days from the date the person was notified of the FTA’s revised decision, and the person must pay all taxes and penalties subject of objection before objecting to the Committee. The Committee will typically be required to give its decision regarding the objection within 20 business days from its receipt. As a final step, if the person is not satisfied with the decision of the Committee, the person may challenge its decision before the competent court. The appeal must be made within 20 business days from the date of the appellant being notified of the Committee’s decision

• Exports of goods and services to outside the GCC; • International transportation, and related supplies; • Supplies of certain sea, air and land means of transportation (such as aircrafts and ships); • Certain investment grade precious metals (e.g. gold, silver, of 99% purity); • Newly constructed residential properties, that are supplied for the first time within 3 years of their construction ; • Supply of certain education services, and supply of relevant goods and services; • Supply of certain Healthcare services, and supply of relevant goods and services.

• The supply of some financial services (clarified in VAT legislation); • Residential properties; • Bare land; and • Local passenger transport

To avoid double taxation where second hand goods are acquired by a registered person from an unregistered person for the purpose of resale, the VAT-registered person will be able to account for VAT on sales of second hand goods with reference to the difference between the purchase price of the goods and the selling price of the goods (that is, the profit margin). The VAT which must be accounted for by the registered person will be included in the profit margin. The legislation will include the details of the conditions to be met in order to apply this mechanism.

A scheme will be introduced to allow a UAE national who is not registered for VAT to reclaim VAT paid on goods and services relating to constructing a new residence which will be privately used by the person and his family. This will allow the recovery of VAT on such expenses as contractor’s services and building materials.

VAT on expenses that were incurred by a business can be deducted in the following circumstances: • The business must be a taxable person (the end consumer cannot claim any input tax refund). • VAT should have been charged correctly (i.e. unduly charged VAT is not recoverable). • The business must hold documentation showing the VAT paid (e.g. valid tax invoice). • The goods or services acquired are used or intended to be used for making taxable supplies. • VAT input tax refund can be claimed only on the amount paid or intended to be paid before the expiration of 6 months after the agreed date for the payment of the supply.

VAT is due on the goods and services purchased from abroad. In case the recipient in the State is a registered person with the Federal Tax Authority for VAT purposes, VAT would be due on that import using a reverse charge mechanism. In case the recipient in the State is a non-registered person for VAT purposes, VAT would be paid on import of goods from a place outside the GCC. Such VAT will typically be required to be paid before the goods are released to the person.

Reverse charge is only applicable if purchases are made outside the UAE In a normal supply transaction, a seller is required to pay value added tax (VAT) to government on supplies made by him. In reverse charge, buyer is required to pay VAT to government on purchases made by him, specially on imports.

If there is no business transaction for the Tax Period, you are required to submit a “nil” VAT Return by the respective due date.

Value Added Tax (or VAT) is an indirect tax. Occasionally you might also see it referred to as a type of general consumption tax. In a country which has a VAT, it is imposed on most supplies of goods and services that are bought and sold. VAT is one of the most common types of consumption tax found around the world. Over 150 countries have implemented VAT (or its equivalent, Goods and Services Tax), including all 29 European Union (EU) members, Canada, New Zealand, Australia, Singapore and Malaysia. VAT is charged at each step of the ‘supply chain’. Ultimate consumers generally bear the VAT cost while Businesses collect and account for the tax, in a way acting as a tax collector on behalf of the government. A business pays the government the tax that it collects from the customers while it may also receive a refund from the government on tax that it has paid to its suppliers. The net result is that tax receipts to government reflect the ‘value add’ throughout the supply chain. To explain how VAT works we have provided a simple, illustrative example below (based on a VAT rate of 5%).

A sales tax is also a consumption tax, just like VAT. For the general public there may be no observable difference between how the two types of taxes work, but there are some key differences. In many countries, sales taxes are only imposed on transactions involving goods. In addition, sales tax is only imposed on the final sale to the consumer. This contrasts with VAT which is imposed on goods and services and is charged throughout the supply chain, including on the final sale. VAT is also imposed on imports of goods and services so as to ensure that a level playing field is maintained for domestic providers of those same goods and services. Many countries prefer a VAT over sales taxes for a range of reasons. Importantly, VAT is considered a more sophisticated approach to taxation as it makes businesses serve as tax collectors on behalf of the government and cuts down on misreporting and tax evasion.

Log into the FTA e-Services portal via E-SERVICES, and go to EDIT on the VAT section and enter your Customs Registration Number. This will automatically update your records.

Businesses will be responsible for carefully documenting their business income and costs and associated VAT charges. Registered businesses and traders will charge VAT to all of their customers at the prevailing rate and incur VAT on goods / services that they buy from suppliers. The difference between these sums is reclaimed or paid to the government.

VAT, as a general consumption tax, will apply at 5% to all transactions of goods and services unless specifically exempted in Article (46) of the Federal Decree-Law No. (8) of 2017 on Value Added Tax or subject to a rate of Zero as per Article (45) of the Federal Decree-Law.

A residential building is a building or part thereof that is intended and designed for occupation by individuals, and mainly includes buildings which can be occupied by any person as main place of residence.It does not include: Any place that is not a building fixed to the ground and can be moved without being damaged. Any building that is used as a hotel, motel, bed and breakfast establishment, or hospital or the like. A serviced apartment for which services in addition to the supply of accommodation are provided. Any building constructed or converted without lawful authority.

A commercial building is any building or part thereof that is not a residential building. Examples would be offices, warehouses, hotels, shops, etc.

A supply of real estate may include the sale, lease or giving the right in any real estate.