The New Year VAT countdown has begun: What you need to buy now!
The UAE is 25 days away from implementing a 5 per cent Value Added Tax (VAT). This has many consumers on edge as they should be any time their wallets are likely to feel lighter.
To allay those fears, the Federal Tax Authority (FTA) has announced the supplies that will be subject to VAT as of January 1, 2018, revealing selected sectors that will be assigned zero-rated tax, such as education, healthcare, oil and gas, transportation and real estate.
Selected supplies in sectors such as transportation, real estate, financial services will be completely exempt from VAT, whereas certain government activities will be outside the scope of the tax system and, therefore, not subject to tax.
The UAE Cabinet is expected to issue a Decision to identify the government bodies and non-profit organisations that are not subject to VAT.
The below table outlines all supplies that will be subject to the 5 per cent Value Added Tax, as well as zero-rated supplies and exempt supplies.
The main difference between zero rate and exempt supplies is that the suppliers of zero-rated goods and / or services can still reclaim all their input VAT, but the suppliers of exempt goods are either not registered for VAT or if they are, they cannot reclaim their input VAT.