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Latest updates from Ministry of Finance, UAE on VAT

Latest updates from Ministry of Finance, UAE on VAT

Ministry of Finance in UAE Triggered a series of awareness sessions on VAT Implementation for the business in UAE from March 21st , 2017 onwards.

The highlights of the VAT Law and regulations in UAE mentioned as below;

The effective date is 1st January 2018 as anticipated.
5% is the standard rate confirmed by the ministry.
Established the “Federal Tax Authority” and two tax laws
Tax Procedure Law (for Governance)
VAT Law (For Application)
Turnover Registration threshold
Mandatory AED 375,000/- and above.
Voluntary AED 187,500/- to AED 375,000/-
Not allowed for Less than AED 187,500/-
The VAT registration starts from Q3 of 2017.
Online filing of returns and payment is available.
VAT return format will include a summary of transactions during the period with the breakup of supplies in each of the 7 Emirates in UAE.
The system of ‘VAT Groups’ will be available in UAE where the companies under common control can file a single VAT return and make a single tax payment. This will be helpful in case of companies with several subsidiaries.
Applicability of VAT in free zones is yet to be clarified.
VAT refund for tourist will most likely not be available considering the low rate of 5%.
All entities are required to maintain the accounting records up to 5 years.
Exemptions/Zero Rated supply:
Health
Education
Financial Services
Export of goods and services
Real Estate
New residential units – 0%
Used residential units – Exempted
Commercial Units – Standard rate
Life insurance
Long term rental
Land – Exempted

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