The GCC framework is ready to make three VAT rates that are expected to levy by the member states. In all three VAT rates, two are about taxable supplies made in a particular time and the second is a tax-exempt supply. The three VAT rates are:
- Standard Rate
- Zero Rate
- Tax Exempt
Table of Contents
- First VAT Returns Filing Date For VAT UAE
- Know about all VAT Tax Rates in UAE for 2018
- Download VAT Rate List on Different Sectors
- VAT Rate On Education Industry in UAE
- VAT Rate on Healthcare Goods and Services
- VAT Rate on Oil and Gas in UAE
- VAT Rate on Real Estate Business in UAE
- VAT Rate on Financial Services in UAE
- VAT Rate on Investment in Gold, Silver and Platinum Jewellery in UAE
- VAT Rate on Insurance and Reinsurance in UAE
- VAT Rate on Food and Beverages in UAE
- VAT Rate on Telecommunication and Electronic Services
- VAT Rate on Government Activities
- VAT Rate on Non for Profit Organization
- VAT Rate on Free Zone in UAE
- VAT Rate on Rest Products and Services in UAE
The standard rate is fixed which is 5% and levied across all the sectors. It is required that all invoices must show the tax value independently and the ultimate bill value consists of total sum plus the tax.
Businesses are charging VAT inclusive price will have to keep the invoice mentioning the VAT charged and rounded to second decimal. All invoices are required to necessarily consist the VAT registration number in order to claim VAT credit.
A zero rate here stands for the tax which is computed at zero rates. The government has given clarifications of the goods which are applicable for Zero rates. Zero-rate comes into effect when goods and services exported comprising a transfer starting or ending in the UAE or its territory, outside of the VAT-implementing GCC state, and to international transportation of passengers.
The GCC list of Zero-rated goods includes food items as per GCC list, Charity organizations, Gold, silver, platinum, International and Intra GCC transport and services, a supply of sea, land and air means of transportation, medicine, and medical Equipment as per GCC list and exports outside GCC. Some other additional exempt list comprises residential real estate (first supply), health and education.
The exempted supplies are not liable to charge any VAT, although the tax paid before a purchase of the item is not liable for credit. GCC exempt list includes bare land, local passenger transport, and imports of goods which are custom exempt.
Some other additional exempt list comprises some specific financial services (margin based) and Residential buildings other than zero-rated.
First VAT Returns Filing Date For VAT UAE
The Federal Tax Authority (FTA) has directed the business to file VAT returns ahead of February 28 for the period ending on January 31. Khalid Ali Al Bustani, director-general, FTA, also mentioned the registered businesses to file tax returns on a quarterly or monthly basis, as decided by the FTA according to their annual revenue.
These adjustments comprised extending tax periods to three months as compared to monthly returns for some businesses in the starting phase of VAT implementation in 2018.
And later on, the tax period will return to the normal monthly filing. Such businesses which got relieved for four and five months are generally small and medium enterprises.
As per the Federal Decree-Law No. (8) of 2017 on the VAT, for a taxable person, the tax period applicable is of three months lasting on the date which is decided by the authority.
Federal Tax Authority (FTA) of UAE announced full VAT rate list for real estate, transportation, financial services sectors that are completely exempt from Value Added Tax.
The UAE and Saudi Arabia are the two member countries of GCC have been implemented VAT, whereas the remaining member countries are implementing the new reform over the coming years.
According to the Federal Tax Authority (FTA), Sectors such as education, healthcare, transportation, real estate, and oil and gas has been levied the zero-rated tax under VAT Reform. Several Government activities are kept out from the new tax reform (therefore not liable to pay the tax).
According to UAE tax officials, it is anticipated that the country might generate Dh12 billion (around 0.8 percent of GDP) revenues in the first year after the introduction of the VAT. It will enhance to Dh20 billion (around 1.2 percent of GDP) in the succeeding year (2019).
The oil industry of the UAE has witnessed some degrades in the past months and its contribution to GDP has gone down significantly from the previous 90 percent.
So, the officials are not positive about getting high revenues from this industry. The real estate sector of the country is also experiencing some decline due to the degrading situation of the oil industry.
One purpose of the VAT is to diversify the economy of the nation. The VAT system is likely to impact the different consumer sectors in different ways, depending on the incomes and the money people are eager to spend on various goods and services.
There are several reasons why VAT is being implemented in the UAE and other GCC countries. The government needs new income sources in order to keep providing good facilities and to promote infrastructure development in the area.
The VAT rate has been kept at a lower side so that there is no major impact on the standard of living. Other main reasons behind the VAT implementation are the recovery of the country’s economy, reduction of their dependency on petroleum products and the building and maintenance of national wealth.
VAT is expected to bring many reforms in the existing tax system in the country. The officials are struggling with the issues regarding the implementation of these reforms. These issues, including the issues with the budget and influence of oil prices, have been discussed several times before and now, these are rising again.
The VAT implementation issues and legal concerns are being dealt with by the UAE government to ensure a smooth transition to the new tax system. The minor tax rate will ensure that it doesn’t have any significant impact on the lifestyle of the UAE residents.
The implementation of VAT in UAE will ease the pressure caused by the country’s tax-free mechanism and will put it in line with the international tax standards.
Know about all VAT Tax Rates in UAE for 2018
In this table you will read all goods and services that will be subject to the 5% Value Added Tax, as well as zero-rated goods and services and exempt goods and services:
VAT Rate On Education Industry in UAE
The most are educational services and related their facility supplied shall be zero-rated if supplied by every one of the following ‘qualifying educational institutions’ it’s a base of growth of any country. Now education is the most priority to another thing because every student has to right for education.
Now education is the most priority to another thing because every student have to right for education. Social growth and economic are supported by investments in the education sector. So how will Value Added Tax (VAT) implementation in the GCC affect the Education Sector?
|VAT Rate On Education Industry|
|Private and public school education(excluding higher education, institute) and related their goods and service provided by education institution||0.00%|
|Higher Education provided by institution or organization owned and government or 50% funded by government, and related goods and services||0.00%|
|Education has to provide by private higher education college, and related goods and services||5.00%|
|Nursery education and pre-school education like playgroup||0.00%|
|School uniform(indicated by any school name)||5.00%|
|Stationery (For school and college student)||5.00%|
|Electronic equipment (mobile, tablets and laptops use in school during education)||5.00%|
|Hire School Ground for Educational Event||5.00%|
|After School curvature Activites and other activities for extra fee||5.00%|
|After school activities(game, extra classes) supplied by teachers are not for extra charge||0.00%|
|School trips( like education tour) where motive is education and within curriculum||0.00%|
|School tour for recreation or not within syllabus||5.00%|
VAT Rate on Healthcare Goods and Services
The above is just a sample of the many issues that will impact private hospitals and government hospital under the VAT. ‘Will the cost of treatment and their equipment in private and government hospitals rise?’ may be one of the important questions your customers will ask you. Doctors’ professional and consultation fees are also likely to be exempt under the VAT.
|VAT Rate on Healthcare Goods and Services|
|Preventing healthcare services like the inoculation.||0.00%|
|Healthcare services propose at treatment of humans including medical services like x-ray, scan and dental services||0.00%|
|Some other Healthcare services that are not for treatment and not nor preventing(e.g. Elective, cosmetic, etc(e.g. Elective, cosmetic, etc)||5.00%|
|Medicines and medical equipment as listed in cabinet decision||0.00%|
|Medicines and medical equipment are not listed in cabinet decision||5.00%|
|Some Other Medical Suppliesision||5.00%|
VAT Rate on Oil and Gas in UAE
In most VAT jurisdictions, supplies of oil and gas are treated as nonexempt supplies for fiscal reasons. Due to the importance of the oil and gas sector in the region, some or all parts of the supply chain could be zero-rated for VAT purposes notably in relation to exploration and production activities
The ambit of Oil & Gas services is quite broad and may include drilling services, seismic surveying, pipeline induction and sustenance, leasing of ships, storing and handling services at installations, refinery and warehousing services sale of feedstock.
|Oil and Gas||Vat Rate|
|Crude oil(Kerosene,Diesel fuel) and natural gas( ethane, butane)||0.00%|
|Other oil(food oil) and gas product including petrol at the pump||5.00%|
|Domestic passenger transportation(including flights,bus within UAE)||Exempt|
|International transportation of passenger and courier (includes intra- GCC)||0.00%|
|Supply of a means of transport like (air, sea, and land) for the commercial transportation of courier and passenger (over 10 People)||0.00%|
|Supply of goods and services related to these means of transport and the transportation of good and passengers||0.00%|
VAT Rate on Real Estate Business in UAE
Under the GCC, every GCC country has the recent to either exempt or zero-rate real estate (property, land) supply. So its Based on the enlist VAT implementing regulations which have been released by Saudi Arabia’s GAZT, residential real estate and industry leasing or licensing law will be exempt from the VAT.
All sales of residential industry (including the first sale) and commercial properties are subject to VAT (value added tax) at the standard rates.
Construction services are subject to VAT at a high rate. The leasing of commercial property is standard-rated and it’s very important. At a time property is higher rates for normal people and after that VAT it’s very high.
|Real Estate||Vat Rate|
|Rent and sale of commercial property(not residential building)||5.00%|
|First sale/ rent of residential property after completion of construction or conversion||0.00%|
|First sale of kindly building||0.00%|
|Sale/rent of residential building and property subsequent to first supply||Exempt|
|Hotels, property, Motels and other serviced accommodation||5.00%|
|Bare land (unused for agriculture)||Exempt|
|Land (useful for agriculture, not bare land)||5.00%|
|UAE Citizen building own house||5% (recoverable)|
VAT Rate on Financial Services in UAE
Many of the supplies made by ‘financial institutions’ like banks are traditionally exempt from The VAT this only be the case in the GCC as well The relive supplies generally include the adoption of deposits, the proviso of loans or granting of credit, the operating of any account like deposit, current or savings accounts, the issue, transfer or disposal of securities among others. these all are related to finance and their service.
|Financial Services||Vat Rate|
|Gross profit based ware(products not having an explicit fee, deputation, discount, rebate or similar thing)||Exempt|
|Product with a different explicit fee, commission, rebate, discount or similar||5.00%|
|Interest on forms Of loaning(including loans, credit cards, finance leasing)||Exempt|
|Another finance service like issue, allotment or transfer of equity or debt security||Exempt|
VAT Rate on Investment in Gold, Silver and Platinum Jewellery in UAE
According to Federal Tax Authority(FTA), The VAT will be imposed on investment like gold, silver and platinum jewelry or coins with less than 99 percent sinlessness.
The VAT will be applicable to the whole jewelry and other piece make a gold rather than on the making costs charged by the goldsmiths.
|Investment in gold, silver and platinum, Jewellery||Vat Rate|
|>99% pure jewelry and tradable in global markets||0.00%|
|<99% pure gold||5.00%|
|Jewelry ( bracelet, necklace)||5.00%|
VAT Rate on Insurance and Reinsurance in UAE
In other VAT legal power, outsourced services (such as shared accounting or IT services) are subject to VAT at the standard rate.
insurance like life insurance, car insurance etc is traditionally exempt from The VAT and this may be the case in the GCC. Exemption means that no other VAT will be charged on the survey of life insurance coverage.
|Insurance And Reinsurance||Vat Rate|
|Insurance and reinsurance like health, motor, property, etc||5.00%|
|Only Life insurance and reinsurance||Exempt|
VAT Rate on Food and Beverages in UAE
While the final list of VAT-exempt announced by the GCC, the ministry of finance has indicated that most food( fast food, cold drink ) items will fall under the five percent rate. Now see the highest possibility of basic food products falling under the purview of VAT applicability.
“In such a scenario, food prices will rise, pushing up the cost of living,” the experts said. This means the contrary to expectations of an exemption, the basic goods will fall under the five percent VAT rate along with imported goods and services, utility bills as well as mobile telephone and internet bills
|Food & Beverages||Vat Rate|
|Food & Beverages(fast food, cold drink)||5.00%|
VAT Rate on Telecommunication and Electronic Services
Electronically supplied services’ like hereinafter ‘electronic services shall all include services which are delivered over the Internet or an electronic network an broadcast service.
Telecommunications services’ shall mean services relating to the transmission, emission or reception of signals, words, images and sounds or information of any nature by wire, radio and optical
|Telecommunication And Electronic Services||Vat Rate|
|Broadcast service or Wired and wireless telecommunication and electronic services||5.00%|
VAT Rate on Government Activities
January 1, 2018, The selected sectors that will be announced zero-rated tax, like education, healthcare, oil and gas, finance, transportation and real estate.
The supplies in sectors like transportation, real estate property, financial services, telecommunication service will be totally exempt from the VAT, whereas certain The government activities will be outside the scope of the tax system (and, therefore, not subject to tax).
|Government Activities||Vat Rate|
|Autonomous activities which are not in competition with the private sector but undertaken by assign government bodies||Considered outside vat system|
|Activities that are not supreme or are in competition with the private sector||Vat rate dependent on good/services ignoring provider|
VAT Rate on Non for Profit Organization
When implementation of Value Added Tax (VAT) in the UAE then the deadline is hover and many charities and non-profit organizations are disordered as to their position under the new VAT law.
Whilst the position, at the time of writing, and about the vat law, remains uncertain for non-profit organizations in the UAE
|Non for profit organization||Vat Rate|
|Activities of other foreign governments, international and national organizations & group, diplomatic bodies and some mission acting as such(if not in business in the UAE)||Considered outside vat system|
|Charitable activities are undertaken by societies and consort of social welfare which are listed by cabinet decision||Considered outside vat system|
|Activites of other not for profit organization(not under the cabinet decision) which are not business activities||Considered outside vat system|
|Business activities tackle by above organization and group.||Vat rate dependent on good/services ignoring provider|
VAT Rate on Free Zone in UAE
Free Zone in UAE is a part of the role out of a VAT and Customs(use the service) Union plan with the other five Gulf Co-Operation Council is Bahrain, Kuwait, Oman, Qatar, and Saudi Arabia.
we resolve the One issue is the VAT position in Free Zones and The UAE has almost 40 free zones, Now highly-successful Free Zones at ports, airports, and the mainland. They have already special tax, customs, and import regimes.
|Free zone||Vat Rate|
|Supplies of good between the occupation in designated free zones||Considered outside vat system|
|Supplies of overhaul between business in designated zones||Vat rate dependent on good/services ignoring location|
|Supplies of good and services in non-designated zones( like golf)||Vat rate dependent on good/services ignoring location|
|Supplies of good and services from swap like mainland to designated zones or designated zones to mainland||Vat rate dependent on good/services ignoring location|
VAT Rate on Rest Products and Services in UAE
When the VAT rate on rest product and their own service have to Zero-rating applies when goods and services are being exportation to outside in UAE a VAT-implementing GCC state, as well as to international export and transportation of passengers or goods including a transfer starting or ending in the UAE or passing through its territory.
|The export of good and services to out of the GCC implementing states||0.00%|
|Activities are undertaken by employees in the course of their employment, including salaries and another service.||Considered outside vat system|
|Supplies between member of a single tax group( like insurance, rest product)p||Considered outside vat system|
|Second-hand goods(e.g. Used cars and bikes sold by retailers), antiques and collector items||5.00%|
|Second-hand goods(e.g. Used cars sold by retailers), antiques and collector items||5% of the profit margin|