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UAE VAT Considerations

1. Location deemed for supply

- For goods where supply takes place

- For services: where supplier has place of residence or if used in UAE, then deemed location of supply to be UAE

- Electronic supply: place where service is used / enjoyed

2. Types of supplies

- Domestic: Standard or Zero rated

- Exports: Zero rated (except exports to Implementing States which may be taxable)

- Imports: Reverse charge mechanism

3. Reverse charge mechanism

Where seller is based non-taxable person, then purchaser pays VAT.

4. Date of Supply

Goods – when goods supplied

Services – when service rendered

(Exceptions... if payment is received or tax invoice issued prior to supply of goods / services, then date of payment receipt may be deemed to be date of supply)

5. Bad Debts

Can claim refund / credit of output tax paid on uncollectible debts can be claimed subject to certain conditions

6. Net VAT payable

Output VAT (VAT Collected/to be collected) Less Input VAT (VAT paid on goods/services)

7. VAT refund will be granted to

- Govt bodies

- Charities

- Specialised companies for international events

- Citizens for construction of house

(Refunds to tourists not expected to be in phase 1)

8. Input tax recovery conditions

- Should be taxable person

- Should be correctly charged

- For eligible purpose

- Have tax invoice

- Must be paid / intended to be paid

- Not non-recoverable

9. VAT returns

- Quarterly returns to be filed (electronically) within 28 days of end of quarter

- May need to return Emirate-wise supply

- Further details awaited

10. Record keeping

Maintain following for 5 years:

-Books of accounts - Documents - VAT accounts - Any other docs specified

Tax invoice very critical to VAT (should have sequential numbering, date, time of supply, description of goods / services, VAT charged in AED)

11. Penalties

For defaults – 3 times VAT (min of AED 500/-)

For evasion – upto 5 times plus could result into prosecution for offence under other applicable laws

12. Audits

Federal Tax Authority may conduct audit of taxable persons on selected basis

13. Excise duty

Excise duty on tobacco, energy drinks & carbonated drinks to be charged wef 1 Oct 2017. VAT will be payable over and above customs duty & excise duty & on value incl. customs & excise.