VAT applicability, payments and Penalty in UAE Telecom Industry

The value-added tax being implemented in UAE from January 1 will also be applicable to telecom service providers in the region. As per the latest information, most of the UAE telecom firms, including Etisalat and Du, will charge the increased tax on their services and products from their consumers.

The telecom company Etisalat has also said in a statement that they will charge a fine of Dh25 from the subscribers who do not pay their mobile and landline bills on time. “Starting from the 1st of January 2018, most of the Etisalat’s products and services shall be subject to a 5 per cent value-added tax in compliance with federal laws and regulations levying and regulating the tax in the UAE.”

The same thing was confirmed by UAE’s other telecom company du on its website saying that all the company products and services will be available with the standard VAT rate of 5 per cent, starting from January 2018.

The VAT executive regulations were approved by the UAE Cabinet on Monday under the supervision of his Highness Sheikh Mohammed bin Rashid Al Maktoum.

VAT is a consumption-based tax that will be levied on a number of goods and services at a fixed rate of 5 per cent and will be paid by the end user. Companies like Etisalat and others making taxable supplies will collect tax from their customers and pay to the government.

The tax shall be levied at a fixed rate of 5 per cent on all taxable supplies. It means a telecom plan of Dh100 would now cost Dh105.

After the implementation of VAT in UAE, the companies like Etisalat will have to provide a proper VAT invoice for all their supplies of taxable services and products to all their customers. Etisalat has requested its business customers to submit their VAT registration details to the company at the earliest in order to receive a full VAT invoice for their purchases.

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