UAE VAT Law, Decoded : Tax Scope and Rate

UAE VAT Law, Decoded : Tax Scope and Rate

Understanding Value Added Tax in UAE is not an easy job, as UAE VAT law can be tricky it not interpreted properly.  UAE VAT law consists of 8 Titles as below: –

Title One: Definitions
Contains key definitions and basic understanding of the UAE VAT law.

Title Two: Tax Scope and Rate
Defines the scope of VAT and rate at 5%, whereas Title Six (6) deals with Zero Rated and Exemptions

Title Three: Supply, Supply of Goods and Services
Definition of supply of goods and services is explained. The most important is the Supply by Agency, it has a huge impact on whether the supply is made in the name of the principal or is made in Agent’s name.

Title Four: Tax Registration and De-registration
Here explained the procedure, Fundamental pillar of all the VAT Exercise is the Registration as De-registrations will not be very often. Like Mandatory, voluntary registration and most importantly the registration of “Tax Group”. This title is one of the most Title in UAE VAT Law.

Title Five: Rules Pertaining to Supplies
VAT is where the supplies are so the Date, place and value of Supply. A crucial part of UAE VAT law.

Title Six: Zero Rates and Exemptions
This title draws a thick line between the Zero rated and Exempt supplies in detail.

Title Seven: Calculation of Due Tax
Deals with very delicate matters of Due Tax for a Tax Period “tax calculation”, adjustments and Recovery therein.

Title Eight: Tax Period, Tax Returns, Payment and Reclaiming of Tax
This title is all about tax period, tax compliance & resultant payments, tax refund (claim), recovery of tax, violations and penalties.

Title Two | Tax Scope and Rate

Article (2) | Scope of Tax
Tax shall be imposed on:
1. Every Taxable Supply and Deemed Supply made by the Taxable Person.
2. Import of Concerned Goods except as specified in the Executive Regulation of this Decree-Law.

Article (3) | Tax Rate
Without prejudice to the provisions of Title Six of this Decree-Law, a standard rate of 5% shall be imposed
on any supply or Import pursuant to Article (2) of this Decree-Law on the value of the supply or Import
specified in the provisions of this Decree-Law.

Article (4) | Responsibility for Tax

The Tax imposed shall be the responsibility of the following:
1. A Taxable Person who makes any supply stipulated in Clause (1) of Article (2) of this Decree-
2. The Importer of Concerned Goods.
3. The Registrant who acquires Goods as stated in Clause (3) of Article (48) of this Decree-Law.

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