VAT Rate List in UAE

Federal Tax Authority (FTA) has announced a complete VAT rate list in UAE. Since VAT has been implemented in UAE and as per Federal Tax Authority (FTA) there are three types of VAT which must be implemented all across UAE as per the nature of the business. 

Businesses which are registered under VAT must levy 5% standard VAT rate and collect it and remit it to the FTA. There are certain specified goods and services that are classified as zero rated supplies or exempt supplies.

VAT Rates in UAE

The VAT rates in UAE are classified as:

Standard Rated VAT  –  5% VAT

Standard rate of 5% VAT will be levied on all taxable supply of goods or services in the state including imports. It is very important for businesses to identify the taxable supplies on which VAT rate of 5% is to be levied.

• Almost all, off the counter retail
• Food at restaurants and hotels
• Construction supplies or hardware tools
• Leisure and entertainment

Zero Rated VAT  –  0% VAT

Although no actual amounts are collected on zero rated supplies but still the VAT is charged at 0%. The supplier can recover the input VAT on costs it incurs in making zero rated supplies. Suppliers of zero rated supplies typically have excess recoverable tax.

The following categories are zero-rated supplies within UAE VAT law. Within each of these categories , there are specific criteria that must be met in order for the zero rating to apply.

• Primary healthcare and some surgeries (Healthcare services)
• Primary and secondary educational institutions (Educational services)
• Residential property for sale (within 3 years of construction)
• International travel and related services
• Exported goods and services
• Investment precious metals
• Buildings used for charities
• Crude oil and natural gas

Exempt Rated VAT  –  No VAT

There is a difference between exempt rated VAT and zero rated VAT. In case of exempt rated VAT, No VAT is charged to customers. The supplier cannot recover input tax on costs it incurs in making exempt supplies.

There are four categories of exempt supplies within UAE VAT legislation. Within each of these categories, there are specific criteria that must be met in order for the exemption to apply.

• Bare land
• Residential Buildings (unless zero-rated)
• Certain financial services
• Local passenger transport

Xact Services