UAE's VAT system is scheduled to go into effect on January 1, 2018 Banking & Finance,UAE. ... The Federal Tax Authority (FTA) has announced a list of the top ten things businesses must know before registering for VAT, in order to raise awareness.... Residents have to pay for healthcare and education.
What is VAT?
Value Added Tax (or VAT) is an indirect tax imposed on the supply of most goods and services. It is one of the most common types of consumption taxes found around the world. More than 150 countries have implemented VAT (or its equivalent, Goods and Services Tax), including all 29 EU member states, as well as Canada, New Zealand, Australia, Singapore and Malaysia.
For data packages, any plan taken in 2017 and falling over into 2018 will be subject to VAT
Here's a rundown of what you need to know about VAT - from what products and services are subject to it to knowing whether companies are trying to pull a fast one on you
- Businesses are not allowed to charge VAT unless they are registered with the Federal Tax Authority and have a tax registration number (TRN)
- Details of VAT should be displayed on the tax invoice issued to customers, which should include the total amount and tax being charged, plus the TRN
- In cases exact change cannot be given, rounding off can be applied; for example, 13 fils can be rounded off to 25 fils, 39 fils to 50 fils and 69 fils to 75 fils
- Leisure and entertainment services - including theme parks, cinema tickets, concerts and restaurants - are subject to VAT
- Buying cards online - it won't cost you anything extra. Salik cards are subject to VAT when bought in stores
- Consultancy and medicines are zero-rated for preventive- and treatment-related services
- VAT will directly hit universities, unless it is 50% funded by a government grant. The only exception is the rent in student accommodation
- VAT is implemented on investment gold, silver and platinum jewellery with 99% purity. For consumers, the tax is applicable on the entire piece rather than on making charges. However, some companies are happy to absorb the VAT cost, mostly on diamonds
- There are no extra charges on recharge cards. For data packages, any plan taken in 2017 and spilling over into 2018 will be subject to VAT
- The public is encouraged to report any complaint via the Ministry of Economy's call centre on 600522225, which works from 7am to 10:30pm.
To help you plan for the future and budget we have compiled a list of the five things that you need to know about VAT in the UAE…
- Younis Al Khouri the Under Secretary of the UAE Ministry of Finance confirmed that all six GCC countries, including the UAE, are set to introduce a 5 per cent value added tax (VAT) from January 1 2018.
- The UAE is expected to pass a waiver on around 100 goods and services, such as food and healthcare. The bad news? A new report by BMI Research indicates that companies subjected to the 5 per cent tax will simply hike up their prices by this amount, making consumers pay more.
- Leisure activities and items such as cars, electronics, jewellery, fizzy drinks and tobacco will fall under the taxed category.
- While businesses with annual revenues of over Dh3.75 million will be obliged to be registered for the GCC VAT system, there will be no income tax on salaries.
- VAT is expected to bring in a whopping AED12 billion in its first year.