What is VAT?
VAT is a transaction-based indirect tax which is levied at each step of the supply chain. End consumers generally bear the VAT cost while registered businesses collect and account for the tax, in a way acting as a tax collector on behalf of the Federal Tax Authority.
What is Full form of VAT
Full form of VAT is “Value Added Tax”
Who have authority for UAE VAT Implementation and Administration?
The Federal Tax Authority (FTA), the government entity responsible for the administration, collection and enforcement of federal taxes (UAE VAT, Excise Tax and others)
Who is liable for VAT Registration
A business must register for VAT if the taxable supplies and imports exceed the mandatory registration threshold of AED 375,000. Furthermore, a business may choose to register for VAT voluntarily where the total value of its taxable supplies and imports (or taxable expenses) is more than the voluntary registration threshold of AED 187,500.
How many types are of UAE VAT Registration in UAE VAT law
There are Two type VAT Registration in UAE VAT law
- Mandatory Registration
- Voluntary Registration
What is Mandatory Registration in UAE VAT
A business must be registered for UAE VAT in following cases
- The total value of its taxable supplies and imports exceeds the mandatory registration threshold over the previous 12 months, OR
- The business anticipates that the total value of its taxable supplies and imports will exceed the mandatory registration threshold in the next 30 days.
The mandatory registration threshold is AED 375,000.
What is Voluntary Registration in UAE VAT
A Business may register for UAR VAT on Voluntary to get Input Vat benefits in following cases
- The total value of its taxable supplies and imports or taxable expenses in the previous 12 months exceeds the voluntary registration threshold, or
- The business anticipates that the total value of its taxable supplies and imports or taxable expenses will exceed the voluntary registration threshold in the next 30 days.
The voluntary registration threshold is AED 187,500.
What is rate of VAT in UAE
The rate of Vat is 5% in UAE currently.
What is Input VAT and Output VAT
VAT charged by Supplier to customer on sales that Vat called input Vat for customer and same VAT called Output VAT for Supplier
Example – ABC sold a laptop to customer XYZ for AED 2,100(Priced AED 2,000+ Vat 5% AED 100).
Input Vat for XYZ (Purchaser) AED 100
Output Vat for ABC (seller) AED 100
What is Net VAT payable to FTA in UAE
Net VAT payable = Output Vat – Input Vat
What are goods and services Exempted from Vat Charges
The following categories of supplies will be exempt from VAT
The supply of some financial services (clarified in VAT legislation)
Residential properties
Bare land
Local passenger transport
