The emergence of value added tax has impacted different products and services differently. There are different categories of products and services that have been chosen by the government but now all the services shall be categorized under the VAT purview that is likely to attract a standard percentage until a certain category of service is exempted. The liability of value added tax should as well rely on where the particular services are being rendered.
They would be eligible for tax payment if they are being rendered within the nation. Services that involve implementation, consultation and manpower resourcing that are rendered outside the nation shall not be taxable. Government authorities announced that value added taxes shall impose a wide impact on the different sectors offering certain services. This article shall demonstrate some of them in detail. The information is well researched and made easier for you to understand.
The Products and Services that are Covered
The average rate of value added tax at present is about 5% that are being charged on a substantial percentage of trading body business product and services. However, the good part is that the fundamental products and services that are categorized as significant for the economy of the nation and needs of citizens are do not incur VAT in their costs. They are exempt or are charged with 0% VAT. The only difference between two of them is that manufacturers of zero-rated products and services are eligible to reclaim the value added tax that they have payed off inputs to their businesses. The VAT impact category details are explained below.
Zero Rates Tax in UAE
The 0% rates involve exportation of items beyond GCC to shield the vital area of business for UAE. The arenas include academia, health, medical equipment, transportations, aircrafts and more. Certain new constructions of the e real estate, international transportation services, natural gas, and crude oil are some of the products that are included under zero-rate VAT.
Exempt Rate Tax in UAE
Certain financial services, bare lands, residential properties, public transportation are all categorized under the exempt rate section. This particular rate involves margin-based items such as fixed deposits, loans, life insurances, however, fee-based finance services, general insurances might be chargeable. You will find the details in the VAT legislation.
VAT Impact on Educational Sector
Academic facilities offered by higher education institutions, and related products and services. There will be additional fees charged for post-school hour activities which shall be up to 5%. However, the academic trips will not be chargeable. These were few of the many VAT details made available but there are more stated in the VAT legislation records.
VAT impact on Insurance Services
Reinsurance and insurance including motor, health, property and more shall be chargeable up to 5%. However Life insurance and reinsurance shall be exempted.
VAT Impact on Services under the Financial Domain
Margin-based items that would not possess commission rebate or explicit fee will be exempted. On the other hand the goods and services that would have such explicit charges would have a VAT percentage of 5%. Also, any kind of leasing or loans shall be free of charges that will be 0% VAT.