VAT in U.A.E. - Exemptions - IMC
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VAT in U.A.E. – Rates & Exemptions

1) VAT in the UAE – What is exempt and what is not?

Following the publication of the Value Added Tax Law (“VAT Law”) by Federal Decree-Law No. (8) of 2017, the UAE Ministry of Finance (“MoF”) has released the VAT Executive Regulations, approved by Cabinet Decision No (52) of 2017 (“VAT Regulations”). The main features and principles of the VAT system are provided in the VAT Law while the specific details of application are provided in the VAT Regulations. With the VAT implementation date confirmed to be 1 January 2018, the release of the VAT Regulations is welcome and constitutes an essential step for the readiness of the UAE businesses.

On December 5th, 2017 the Federal Tax Authority (FTA) has announced the supplies that will be subject to Value Added Tax (VAT), revealing selected sectors that will be assigned zero-rated tax, such as education, healthcare, oil and gas, transportation and real estate.

2) U.A.E. VAT Rates – Education Sector

Education VAT Rate
Private and public school education(excluding higher education) and related goods and services provided by education institution 0%
Higher education provided by institution owned by government or 50% funded by government, and related goods and services 0%
Education provided by private higher educational institutions, and related goods and services 5%
Nursery education and pre-school education 0%
School uniforms 5%
Stationery 5%
Electronic equipment (tablets,laptops,etc.) 5%
Renting of school grounds for events 5%
After school activities for extra fee 5%
After school activities supplied by teachers and not for extra charge 0%
School trips where purpose is educational and within curriculum 0%
School trips for recreation or not within curriculum 5%

3) U.A.E. VAT Rates – Healthcare Sector

Healthcare VAT Rate
Preventive healthcare services including vaccinations 0%
Healthcare services aimed at treatment of humans including medical services and dental services 0%
Other healthcare services that are not for treatment and are not preventive (e.g.elective,cosmetic,etc.) 5%
Medicines and medical equipment as listed in Cabinet Decision 0%
Medicines and medical equipment not listed in Cabinet Decision 5%
Other medical supplies 5%

4) U.A.E. VAT Rates – Oil and Gas Sector

Oil and Gas VAT Rate
Crude Oil and Natural Gas 0%
Other Oil and Gas products including Petrol at the Pump 5%

5) U.A.E. VAT Rates – Transportation Sector

Transportation VAT Rate
Domestic passenger transportation (including flights within UAE) Exempt
International transportation of passengers and goods (including intra-GCC) 0%
Supply of a means of transport (air, sea and land) for the commercial transportation of goods and passengers (over 10 people) 0%
Supply of goods and services relating to these means of transport and to the transportation of  goods and passengers 0%

6) U.A.E. VAT Rates – Real Estate Sector

Real Estate VAT Rate
Sale and rent of commercial buildings (not residential buildings) 5%
First sale/rent of residential building after completion of construction or conversion 0%
First sale of  charitable building 0%
Sale/rent of residential buildings subsequent  to first supply Exempt
Hotels, motels and serviced accommodation 5%
Bare land Exempt
Land (not bare land) 5%
UAE citizen building own home 5% (recoverable)

7) U.A.E. VAT Rates – Financial Services Sector

Financial Services VAT Rate
Margin based products (products not having an explicit fee, commission, rebate, discount or similar) Exempt
Products with an explicit fee, commission, rebate, discount or similar 5%
Interest on forms of lending (including loans, credit cards, finance leasing) Exempt
Issue, allotment or transfer of an equity or debt security Exempt

8) U.A.E. VAT Rates – Telecom, Insurance, Gold and Food

Investment Gold, Silver and Platinum, Jewellery VAT Rate
>99% pure and tradable in global markets 0%
<99% pure 5%
Jewellery 5%
Insurance and Reinsurance VAT Rate
Insurance and reinsurance (including health, motor, property) 5%
Life insurance and life reinsurance Exempt
Food and Beverages VAT Rate
Food and beverages 5%
Telecommunications and Electronic Services VAT Rate
Wired and wireless telecommunications and electronic services 5%

9) U.A.E. VAT Rates – Government Sector

Government Activities VAT Rate
Sovereign activities which are not in competition with the private sector undertaken by designated government bodies Considered outside VAT system
Activities that are not sovereign or are in competition with the private sector VAT rate dependent on good/service ignoring provider

10) U.A.E. VAT Rates – Not for Profit Organizations

Not for Profit Organizations VAT Rate
Activities of foreign governments, international organizations, diplomatic bodies and missions acting as such (if not in business in the UAE) Considered outside VAT system
Charitable activities undertaken by societies and associations of public welfare which are listed by Cabinet Decision Considered outside VAT system
Activities of other not for profit organizations (not listed in Cabinet Decision) which are not business activities Considered outside VAT system
Business activities undertaken by the above organizations VAT rate dependent on good/service ignoring provider

11) U.A.E. VAT Rates – Free Zones Sector

Free Zones VAT Rate
Supplies of goods between businesses in designated zones Considered outside VAT system
Supplies of services between businesses in designated zones VAT rate dependent on service ignoring location
Supplies of goods and services in non-designated zones VAT rate dependent on good/service ignoring location
Supplies of goods and services from mainland to designated zones or designated zones to mainland VAT rate dependent on good/service ignoring location

12) U.A.E. VAT Rates – Other Sectors

Others VAT Rate
Export of goods and services to outside the GCC implementing states 0%
Activities undertaken by employees in the course of their employment, including salaries Considered outside VAT system
Supplies between members of a single tax group Considered outside VAT system
Any supplies of services or goods not mentioned above (includes any items sold in the UAE or service provided) 5%
Second hand goods (e.g. used cars sold by retailers), antiques  and collectors’ items 5% of the profit margin

13) About IMC

About IMC

IMC is a cross border advisory firm focusing on the AMEA (Asia, Middle East and Africa) markets. We specialize in corporate advisory services, global mobility services, private client and family advisory, international tax, corporate finance, mergers and acquisitions, investment advisory and business support and outsourcing solutions. IMC has been operating in GCC for over 10 years.We have a dedicated “VAT in GCC” team set-up in Dubai, UAE.

 

How can IMC assist you?

IMC’s comprehensive approach to tax advisory comes from a thorough understanding of ground realities and decades of experience of serving clients around the world. You can trust us your partners in successful adoption of VAT practices in your business and being 100% compliant. Our team is involved at every stage of the process followed by a post adoption review and continuously updating you about the amendments in the laws.

 

IMC’s Scope of VAT Assistance

  • VAT Advisory
  • VAT Training
  • VAT Implementation
  • VAT Optimization

 

Contact details

Intuit Management Consultancy
M02 NBQ Building
Khalid Bin Al Waleed Road
Bur Dubai, P.O. Box 115887
Dubai, United Arab Emirates
Tel: +971 4 3709963
E-mail:bc@intuitconsultancy.com
Website:www.intuitconsultancy.com

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