Value added tax (VAT) of 5% introduced in UAE


Value added tax (VAT) of 5% introduced in UAE

Value Added Tax (VAT) in the UAE is a new concept in the region. VAT is effective from 1st January 2018 at a standard rate of 5% or Zero rated as the case may be. VAT is an indirect tax that is collected at each stage of production or sale and is also known as the consumption tax. VAT AT 5% is applicable to almost all the goods and services with just a few being Exempted & Zero Rated.

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Offshore companies (RAK Offshore) are exempt from the VAT. Your own residential status in UAE does not matter. The location of the corporate bank account does not matter either. If all the activities of your company take place abroad, you don’t need to register for VAT. VAT is charged only on the sales to UAE.

If your company receives more than 375,000 AED in annual turnover, but if this amount is earned outside UAE you are exempt from the VAT in this case. Registered agents in the UAE who are dealing with the incorporation of the companies and provide other services to offshore companies, from 1st January 2018, must add on all their invoices 5% VAT.

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