Deepak Gupta | Jan 14, 2018 |
UAE VAT: VAT Applicability in Dubai:UAE VAT was introduced from 1st January 2018. One of the main reason of its implementation was to help government to move towards its vision of reducing dependence on oil and other hydrocarbons as a source of revenue.
All Taxable Supplies will be liable to VAT at 5 per cent standard rate.
Businesses that meet the minimum annual turnover requirement (AED 375,000 in preceding 12 months) will be required to register for VAT. There is also option to get oneself voluntary registered in the value of supply or expenses exceeds AED 187,500/-.
Tax Registration Number (TRN): A unique number issued by the Authority for each Person
registered for Tax purposes.
This method is also called the Tax credit method or Voucher method as the business takes the credit of the tax paid by him on the inputs purchased by him and deposits the balance amount to the VAT department.
From the following illustration, the mode of calculation of tax under this method will become
Clear :
| Stage | Particulars | VAT Liability | Less VAT Credit | Net Tax to Government |
| I | A farmer grows dates & sells it to a processing factory. He collects VAT from the factory & pays it to the government. | AED 50 | He will not get any VAT credit, being the first seller. | AED 50 |
| II | Dates are than processed into syrup & VAT is charged by factory owner from retailer. | AED 75 | He will get input of VAT paid to farmer i.e.AED 50 | AED 25 |
| III | Syrup is then sold to customers at retail outlet. | AED 100 | He will get input of VAT paid to factory owner i.e.AED 75 | AED 25 |
All GCC Countries have agreed to implement VAT latest by January, 2019 and in that direction, have already unanimously passed the Framework, which is consumption based model for common law.
The Member States of the Gulf Cooperation Council (GCC), are:
The United Arab Emirates,
The Kingdom of Bahrain,
The Kingdom of Saudi Arabia,
The Sultanate of Oman,
The State of Qatar, and
The State of Kuwait,
For detailed knowledge of U.A.E. VAT please refer the background material released by The Institute of Chartered Accountants of India on the link provided here under:
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