Value Added Tax (VAT)

Value Added Tax (VAT) was introduced in the UAE on 1 January 2018 with a rate of VAT 5%. The VAT, as a general consumption tax, will apply to the majority of transactions in goods and services. UAE imposes VAT on tax registered businesses on a taxable supply of goods or services at each step of the supply chain. VAT registered businesses collect the amount on behalf of the government; consumers bear the VAT in the form of a 5% increase in the cost of taxable goods and services they purchase in the UAE.

Please find here the link to the VAT Decree-Law N (8) of 2017 on Value Added Tax.

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 in excess of the voluntary registration threshold of AED 187,500.

The UAE cabinet has defined some of the free trade zones as designated zones. These are treated as 'outside the UAE' for tax purposes. The movement of goods / services within and between these zones is tax-free. Please find the list of designated zones here.

Please find here more information on VAT and on how to register for VAT with the Federal Tax Authority (FTA) of the UAE. Please find also here the VAT user guide

At the end of each tax period, VAT registered businesses or the 'taxable persons' must submit a VAT return to the FTA. The following guideline shows your four steps to register a VAT return, please click here for the link.

For more information, please do not hesitate to contact the AHK Dubai.

VAT Refunds

You can claim VAT refunds in a number of circumstances. You may be a taxable person in a net tax refundable position or someone who is eligible for refunds under the special schemes. Refer to the detailed guidance on the conditions and requirements for VAT refunds below:

VAT refunds for taxable persons.

• VAT refunds for foreign businesses.
• VAT refund for tourists.
• VAT refund for UAE nationals building new residences.
• VAT refunds for Foreign Governments, International Organizations & Diplomatic Bodies.

VAT Refund for Exhibitions and Conferences:

Declaration by International Exhibitor and Attendee of Conference

VAT Refund for Business Visitors:

• FTA User Guide Summary 

VAT Refund Scheme for Tourists will come into effect from November 18, 2018

The UAE Federal Tax Authority (FTA) has announced that the tax refund scheme for tourists will come into effect from November 18, allowing eligible tourists to request refunds of value added tax (VAT) incurred on their purchases.

The first phase will see the digital system of the Tax Refund for Tourists Scheme implemented at Abu Dhabi, Dubai and Sharjah international airports. As of mid-December, the system will be fully operational to include all airports and land and sea ports in the UAE.

The authority explained that tax invoices issued starting from November 18, 2018 will qualify tourists who are eligible for a tax refund to reclaim taxes incurred on their purchases.

 Conditions for retailers to take part in the scheme:

1. The retailer must be registered with the FTA for VAT and have a tax registration number (TRN)
2. The supplier' sales of goods must not be excluded from the refund scheme, as determined by the   authority.
3. The retailer must submit a request to participate in the Scheme as determined by the FTA
4. The retailer must meet the financial credit requirements specified by the system operator and be committed to submitting Tax Returns and paying due taxes regularly.

 For further information please contact the AHK Dubai.  

Please note that for a final judgement you should seek an expert’s advice.

 Online Portal:

The UAE’s Federal Tax Authority has announced it has developed its eservices to allow taxpayers to be linked directly to recognized tax agencies via eservices.tax.gov.ae. The link enables agencies to register tax returns and make tax related transactions on behalf of a taxpayer. The Authority said the service can be used by taxpayers to appoint an agency to represent them in tax affairs”