United Arab Emirates VAT

Updated on May 31, 2022

UAE announced its Value Added Tax decree law on August 27th, clearing the path for its implementation on January 1st, 2018. While the basic value added tax (VAT) rate will be 5 percent, there will be no VAT on select items.

As soon as the Executive Regulation is published, we’ll let you know when it’s available.

Join Philippe Norré, Head, KPMG and Colin Matthews, Avalara for a short webinar to run through the latest VAT developments in Saudi Arabia and UAE.

UAE VAT law

Aspects such as these are included in the new law:

On taxable goods and imports, a 5% tax
Value-added tax threshold (Dh 375,000) and computations, as well as the option to register for VAT voluntarily (if revenue above Dh 187,500)
Tax groups can be created
Calculating the date of supply for the purposes of VAT
Where products and services are sold affects the rules.
VAT In other GCC governments that have introduced VAT, the provision of goods and services is taxed at zero percent
The laws on service supply exemptions, i.e. taxed where provided
Tax collectors’ role and influence
Calculating taxable supply values, discounts and import values.
As a result of these rules, a variety of products
Items with a zero star rating include:
Exports
Passenger transportation across the globe
Gold and silver imports
Initial supply (within 3 yrs of construction) property belonging to a person
Natural gas and crude oil
Free and open to the public instruction
Supplies that are exempt from taxation
Insurance and other financial services
Supply of housing for the general public (subject to zero rating clauses)
Land
Transportation of people
Imports and transfers from outside the GCC are subject to reverse charge restrictions. In the Executive Regulation, more details will be provided on the implementation of VAT.
UAE has since gained control of the authority to recoup input VAT, including that on items imported there (onward supply relief)
Bad debt and credit cards
Invoice requirements for VAT, FX treatment, and the date of issuance are all covered.
When to claim tax credits, carryovers, and refunds
Recovering VAT on goods and services purchased by non-residents
Penalties
Requirements for record-keeping, such as the following:
Invoices, credit notes, and other paperwork are all included.
In and out of the system
The Executive Regulation will specify the minimum amount of time that records must be kept.
Regulations that will be in place when VAT is implemented

 

United Arab Emirates VAT rates

Rate Type Which goods or services
5% Standard On taxable supplies and imports
0% Zero Exports; International passenger transport; Import of precious metals; First supply (within 3 yrs of construction) residential properties; Crude oil and natural gas; Publicly provided education
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