With the introduction of value added tax in the UAE ever since January 01, 2018, the rate of VAT is at 5% and nit will be applicable on supplies of any service or good in State. The businesses that are registered under VAT in UAE are responsible for levying VAT at 5% and collect it. The businesses also require remitting it to government. On almost all supplies in the UAE, the rate of VAT is about 5% which is levied and specified services and goods with type of the supplies are classified as the exempt supplies with a zero rate supply. Therefore, tax structure for levying purpose can get classified as mentioned right below.

What the VAT in UAE Rate Structure Indicate?

Mentioned below is the rate type and rate of the tax with it. To know more, read on.

  • Standard Rate – 5%
  • Zero-Rated Supplies – 0%
  • Exempt Supplies – Nil

As aforementioned, the standard rate about 5% is levied on the taxable supplies of services and goods or in state that include imports. The 5% VAT rate is levied on taxable values that registered businesses require determining with regards to provisions of Regulation or Act. In almost all the cases, taxable value happens to be sale value. As a matter of fact, the 5% standard rate happens to be uniform around GCC member state.

How can one Determine Whether or not Supply is the Taxable Supply?

The 5% standard rate of VAT is levied when the services or goods are supplied. And determining whether or not supply is the taxable supply is very simple.

The ‘taxable supply’ term refers to the types of Goods or the Services supply for considerations that are made by the taxable person that conduct businesses in State which can also include zero rate supply but doesn’t include the exempt supplies. Though the zero-rated supply is also included as the taxable supplies, and the tax levy is zero percent.

Therefore, expect the zero-rated supply and the exempt supplies, on other supplies; the rate of VAT of 5% is levied. For determining whether or not supply is the taxable supply, one has to perform the below-offered things.

First off, it is necessary to determining whether or not the supply is under the zero-rated or the list of exempt supplies.

Second, in case none of the supplies fall under the list of zero-rated ones or exempt list, then it can be understood that the supplies will be taxable and you require charging the value added tax at about 5%.

If a couple of the supplies fall under the exempt list or list of zero rate, then the others are the taxable ones and one requires charging the value added tax at about 5%.

It becomes crucial for the businesses for determining taxable supplies on the ones where 5% VAT rate is levied. With an early attempt of determining, it will help businesses prepare in advance in order to avoid consequences of the non-compliance.

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