By Julia | December 14th, 2017 | VAT
The VAT implementation in UAE is going to take place in another few days, and the government is trying its best to make the entire country well-informed about the latest regulations and tax framework. In a recent announcement, the Federal Tax Authority (FTA) has revealed the list of supplies across various sectors that are going to be subject to Value Added Tax (VAT) from the beginning of 2018. FTA has also disclosed the list of selected sectors that will be allocated zero-rated tax. The list of those selected sectors includes healthcare, education, oil and gas, real estate and transportation.
Some of the selected supplies in the sectors like real estate, financial services and transportation are going to be completely exempt from VAT. Interestingly, some of the government activities will be considered outside of the latest VAT system in the country, which means those activities won’t be subject to tax. This list of activities includes those that are undertaken solely by the government without any competition with the private sector and activities that are undertaken by the non-profit organizations.
The Cabinet of the UAE is expected to issue a Decision that will help identify the government bodies and non-profit organizations that are not subject to the latest VAT charges. The following tables give a complete outline of all the supplies that are subject to the 5% value added Tax, as well as supplies with zero-rated VAT and exempt VAT.
Education Sector | |
---|---|
Supplies | VAT rates |
Public and private school education (excluding higher education) and associated goods and services offered by the education institute. | 0% |
Higher education offered by Government-owned or Government-sponsored (50% funded) institutes and related goods and services. | 0% |
Education provided by the private higher education institutes, and associated goods and services. | 5% |
Pre-school education and nursery education | 0% |
School uniforms | 5% |
Stationery | 5% |
Electronic equipment (Laptops, tablets, projectors, etc.) | 5% |
Renting of school grounds for events | 5% |
Extra-curricular (after school) activities for extra fee | 5% |
After school activities provided by teachers without any extra charge | 0% |
School trips for educational purpose (within the curriculum) | 0% |
School trips for recreation or trips that aren’t mentioned in the curriculum | 5% |
Healthcare Sector | |
---|---|
Supplies | VAT rates |
Services for preventive healthcare including vaccination | 0% |
Healthcare services for treatment of humans (both medical and dental services) | 0% |
Other healthcare services that aren’t part of preventive, medical or dental treatment (elective, cosmetic etc.) | 5% |
Medicines and the medical equipment as mentioned in the Cabinet Decision | 0% |
Medicines and the medical equipment not listed in the Cabinet Decision | 5% |
Other medical supplies | 5% |
Oil and Gas | |
---|---|
Supplies | VAT rates |
Natural gas and crude oil | 0% |
Other products if gas and oil (including the petrol at the pump) | 5% |
Transportation Sector | |
---|---|
Supplies | VAT rates |
Transportation for domestic passengers (including the flights within UAE) | Exempt |
International transportation of passengers and goods (including intra-GCC flights) | 0% |
Supply of a means of transport (land, air or seas) for the commercial purpose of goods and passenger (more than 10 people) transportation. | 0% |
Supply of services and goods relating to these particular means of transport and the transportation of passengers and goods. | 0% |
Real Estate Sector | |
---|---|
Supplies | VAT rates |
Sales and rent of commercial buildings (not used for residential purpose) | 5% |
First sale/rent of residential building after finishing the construction or conversion | 0% |
First sale of building used for charitable causes | 0% |
Sale or rent of residential buildings following the first supply | Exempt |
Serviced accommodations like hotels, motels, etc. | 5% |
Bare land | Exempt |
Land (not considered bare land) | 5% |
Personal home owned by a UAE citizen | 5% (recoverable) |
Financial Services | |
---|---|
Supplies | VAT rates |
Products based on margin (products without an explicit fee, rebate, commission, discount or similar element) | Exempt |
Products having an explicit fee, commission, discount, rebate or similar element | 5% |
Interest on various forms of lending (e.g. loans, credit, finance leasing, and cards) | Exempt |
Issue, allotment or transfer of equity or debt security | Exempt |
Investment gold, silver and Platinum, Jewellry | |
---|---|
Supplies | VAT rates |
99% or purer and tradable in global markets | 0% |
Less than 99% pure | 5% |
Jewellery | 5% |
Insurance and Reinsurance | |
---|---|
Supplies | VAT rates |
Insurance and reinsurance (including property, motor, and health) | 5% |
Life insurance and life reinsurance | Exempt |
Food and beverages | |
---|---|
Supplies | VAT rates |
Food and beverages | 5% |
Telecommunications and other electronic services | |
---|---|
Supplies | VAT rates |
Wireless and wired telecommunications and electronic services | 5% |
Government Activities | |
---|---|
Supplies | VAT rates |
Sovereign activities that are not in competition with the private sector undertaken by designated government entities | Considered outside VAT framework |
Activities that are not considered sovereign or are in competition with the private sector | VAT rates dependent on service/good ignoring provider |
Non-profit Organizations | |
---|---|
Supplies | VAT rates |
Activities of international organizations, foreign governments, diplomatic bodies and missions acting as such (if not in business in the UAE) | Considered outside VAT framework |
Charitable activities carried out by societies and associations of public welfare that are listed by Cabinet Decision | Considered outside VAT framework |
Activities of other non-profit organizations (not mentioned in Cabinet Decision) that are not business activities | Considered outside VAT framework |
Business activities that are undertaken by the aforementioned organizations | VAT rate dependent on service/good ignoring provider |
Free Zones | |
---|---|
Supplies | VAT rates |
Supplies of goods between the business in designated zones | Considered outside VAT framework |
Supplies of services between the businesses in designated zones | VAT rate dependent on service ignoring the location |
Supplies of services and goods in the non-designated zones | VAT rate dependent on service/good ignoring location |
Supplies of services and goods from mainland to the designated zones or vice versa | VAT rate dependent on service/good ignoring location |
Other | |
---|---|
Supplies | VAT rates |
Export of services and goods to outside the GCC implementing states | 0% |
Activities carried out by the employees in the course of their employment, including salaries | Considered outside VAT framework |
Supplies between members of a single tax group | Considered outside VAT framework |
Any supplies of goods or services that are not mentioned above (includes any item that is sold in the UAE or service provided) | 5% |
Second-hand goods (used vehicles cold by retailers), collectors’ items and antiques | 5% of the profit margin |
Uaevatexpert.ae is one of the leading VAT consultancies in the UAE which offers adequate support to the businesses and individuals in the country and help them get acquainted with the latest regulations and tax provisions. There’s a team of professionals who can help anyone (even a layman) learn about the significant issues like VAT Registration, VAT implementation and VAT return filing services in the UAE. There are some industry stalwarts in the team who can provide valuable assistance in the matter of VAT implementations which concern one’s business operations and prevent him/her from making any rash decision.
Besides VAT consultations, the experts can provide several other services including accounting assistance, auditing support, company incorporation and tax advisory. They use state-of-the-art infrastructure to offer you the best in class services, and strive relentlessly to improve the quality of the services so that you get all the support from their end to grow your business seamlessly.
Contact Us to get VAT registered or understand more about your VAT obligations.
ORLearn all the minute details about the latest tax regulations and become VAT ready with the finest VAT training packages at Uaevatexpert.ae.
Easy Way for VAT calculation , VAT filing and VAT invoices
Get in Touch with Us Today, and Make Your Firm More Functional
GET FREE Trial For SoftwareEasy Way for VAT calculation , VAT filing and VAT invoices