Value Added Tax (or VAT) is an indirect tax. Occasionally you might also see it referred to as a type of general consumption tax. In a country which has a VAT, it is imposed on most supplies of goods and services that are bought and sold.

VAT is one of the most common types of consumption tax found around the world. Over 150 countries have implemented VAT (or its equivalent, Goods and Services Tax), including all 29 European Union members, Canada, New Zealand, Australia, Singapore and Malaysia.

VAT is charged at each step of the ‘supply chain’. Ultimate consumers generally bear the VAT cost while businesses collect and account for the tax, in a way acting as a tax collector on behalf of the government.

A business pays the government the tax that it collects from the customers while it may also receive a refund from the government on tax that it has paid to its suppliers. The net result is that tax receipts to government reflect the ‘value add’ throughout the supply chain.

A residential building is a building or part thereof that is intended and designed for occupation by individuals, and mainly includes buildings which can be occupied by any person as main place of residence. It does not include:

• Any place that is not a building fixed to the ground and can be moved without being damaged.
• Any building that is used as a hotel, motel, bed and breakfast establishment, or hospital or the like.
• A serviced apartment for which services in addition to the supply of accommodation are provided.
• Any building constructed or converted without lawful authority.

The DTS is a newly introduced compliance programme applicable to manufacturers and importers of tobacco and tobacco products. The DTS will deliver unique pack marks to allow product tracking and traceability from the point of manufacture through to final Emirate of distribution, and to support the enforcement activity targeting the reduction in illicit tobacco trading. For the time being, DTS will apply to cigarettes.

 

The DTS Solution will require the manufacturers to apply specific high security control markers (stamps) and codes to all packs, with the principle aims of the DTS System being:

• To enhance the FTAs ability to control excise taxes on cigarettes sold in the UAE, following importation or local manufacture.
• To enhance the control of Excise Tax collection and give the relevant Authorities the ability to analyze and audit the supply chain to better identify the trade in illicit tobacco products.
• To meet the compliance standards laid down by the WHO’s Framework Convention on Tobacco Control (FCTC) through the enabling of tracking and traceability of compliant tobacco products.

A business must register for VAT if its taxable supplies and imports exceed the mandatory registration threshold of AED 375,000.

Furthermore, a business may choose to register for VAT voluntarily if its supplies and imports are less than the mandatory registration threshold, but exceed the voluntary registration threshold of AED 187,500.

Similarly, a business may register voluntarily if its expenses exceed the voluntary registration threshold. This latter opportunity to register voluntarily is designed to enable start-up businesses with no turnover to register for VAT.

Purchase of goods and services by tourists in the UAE will be subject to VAT. However, tourists will be eligible to reclaim the VAT incurred on their purchase of goods under the Tax Refunds for Tourists Scheme subject too meeting certain conditions.

Validation will be available 24/7 and refund desks will be open at major airports 24/7.

No. Only the owner of the passport/GCC ID under which the Tax Free Tag is registered is entitled to validate them and collect the refund.

No.

The invoice must be attached to the Tax Free Tag and presented at the airport as part of the refund process. If not, the tourist will not receive their tax free refund at the exit point. Invoice wallets will be handed to tourists at the stores to keep their Tax Free Tag purchases organised.

Yes, as long as the tourist exporting the goods is present during the purchase, and it is the exporter's information that is completed for the VAT refund.

No.

Yes, the invoice should be issued on the date the goods are collected in person by the tourist at a physical store, and the Tax Free Tag issued and attached to it on the same day. If the tourist pays online, the invoice must clearly state that it is an advance / deposit / booking fee and when collecting the goods the actual sales invoice is issued on the day. Otherwise it is not possible to purchase online and claim tax free refunds.

The merchant support help line will be available 7 days a week from 10am to midnight (and 2am for holidays when extended store hours are in place). Emails can be sent at any time.

Yes, if a restaurant sells goods that are eligible under this scheme, they can register.

No, as a minimum, the original or copy of the passport or GCC ID details are needed.

Tax is the means by which governments raise revenue to pay for public services. Government revenues from taxation are generally used to pay for things such public hospitals, schools and universities, defence and other important aspects of daily life.

A direct tax is collected by a government from the person on whom it is imposed (e.g., income tax, corporate tax).

An indirect tax is collected for a government by an intermediary (e.g. a retail store) from the person that ultimately pays the tax (e.g., VAT, Sales Tax).

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CT is a form of direct tax levied on the net income or profit of corporations and other businesses. CT is sometimes also referred to as “Corporate Income Tax” or “Business Profits Tax” in other jurisdictions.

A competitive CT regime based on international best practices is expected to cement the UAE’s position as a leading global hub for business and investment and accelerate the UAE’s development and transformation to achieve its strategic objectives.

Introducing a CT regime also reaffirms the UAE’s commitment to meeting international standards for tax transparency and preventing harmful tax practices.

Most countries in the world have a comprehensive CT regime, including most of the countries in the Middle East.