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Lewis & Pecker

AVS Lewis & Pecker is a professional financial service provider based in the UAE that delivers customized business and financial solutions to organizations in the country.

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Value added tax Services in Dubai, UAE

Value Added Tax (VAT) is an indirect tax levied on the consumption of goods and services at each stage of the supply chain, from production to the final sale to consumers. In the United Arab Emirates (UAE), VAT was introduced on January 1, 2018, at a standard rate of 5%. The Federal Tax Authority (FTA), established under Federal Law by Decree No. 13 of 2016, oversees the implementation and administration of VAT in the UAE.

VAT Registration Requirements

Responsibilities of VAT-Registered Businesses

Once registered, businesses are obligated to:

Charge VAT: Apply VAT at the prevailing rate to all taxable goods and services supplied. 
Reclaim VAT: Recover any VAT paid on business-related goods or services. 
Maintain Records: Keep comprehensive business records to enable the government to verify correct VAT practices.

Regular reporting to the government is mandatory, detailing the amount of VAT charged and paid. If a business has charged more VAT than it has paid, it must remit the difference to the government. Conversely, if it has paid more VAT than charged, it can reclaim the difference.

VAT Treatment of Real Estate

The VAT treatment of real estate in the UAE depends on the type of property:

Commercial Properties: Sales and leases are subject to the standard VAT rate of 5%. 
Residential Properties: Generally exempt from VAT to ensure that VAT does not constitute an irrecoverable cost to those who buy their own properties. However, the first supply of residential properties within three years of completion is zero-rated, allowing real estate developers to recover VAT on construction costs.

Zero-Rated and Exempt Sectors

Certain sectors are designated as zero-rated or exempt from VAT:

Zero-Rated Supplies: VAT is charged at 0% for:
- Exports of goods and services outside the GCC. 
- International transportation and related supplies. 
- Supplies of certain sea, air, and land transportation means (e.g., aircraft and ships). 
- Certain investment-grade precious metals (e.g., gold, silver of 99% purity). 
- First supply of newly constructed residential properties within three years of construction. 
- Certain education and healthcare services, along with relevant goods and services. 
Exempt Supplies: No VAT is charged for:
- Some financial services. 
- Residential properties. 
- Bare land. 
- Local passenger transport.