-
Why Grant Thornton
Whether you’re growing in one market or many, looking to operate more effectively, managing risk and regulation, or realising stakeholder value, our firms can help.
-
Culture and experience
Grant Thornton’s culture is one of our most valuable assets and has steered us in the right direction for more than 100 years.
-
Global scale and capability
Beyond global scale, we embrace what makes each market unique, local understanding on a global scale.
-
Join our network
In a world that wants more options for high quality services, we differentiate in the market to grow sustainably in today’s rapidly changing environment.
-
Leadership governance and quality
Grant Thornton International Ltd acts as the coordinating entity for member firms in the network with a focus on areas such as strategy, risk, quality monitoring and brand.
-
Africa
24 member firms supporting your business.
-
Americas
31 member firms, covering 44 markets and over 20,000 people.
-
Asia-Pacific
19 member firms with nearly 25,000 people to support you.
-
Europe
53 member firms supporting your business.
-
Middle East
8 member firms supporting your business.
-
Business consulting services
Our business consulting services can help you improve your operational performance and productivity, adding value throughout your growth life cycle.
-
Business process solutions
We can help you identify, understand and manage potential risks to safeguard your business and comply with regulatory requirements.
-
Business risk services
The relationship between a company and its auditor has changed. Organisations must understand and manage risk and seek an appropriate balance between risk and opportunities.
-
Cybersecurity
As organisations become increasingly dependent on digital technology, the opportunities for cyber criminals continue to grow.
-
Forensic services
At Grant Thornton, we have a wealth of knowledge in forensic services and can support you with issues such as dispute resolution, fraud and insurance claims.
-
Mergers and acquisitions
We work with entrepreneurial businesses in the mid-market to help them assess the true commercial potential of their planned acquisition and understand how the purchase might serve their longer-term strategic goals.
-
Recovery and reorganisation
Workable solutions to maximise your value and deliver sustainable recovery.
-
Transactional advisory services
We can support you throughout the transaction process – helping achieve the best possible outcome at the point of the transaction and in the longer term.
-
Valuations
We provide a wide range of services to recovery and reorganisation professionals, companies and their stakeholders.
-
IFRS
At Grant Thornton, our IFRS advisers can help you navigate the complexity of financial reporting from IFRS 1 to IFRS 17 and IAS 1 to IAS 41.
-
Audit quality monitoring
Having a robust process of quality control is one of the most effective ways to guarantee we deliver high-quality services to our clients.
-
Global audit technology
Our global assurance technology platform provides the ability to conduct client acceptance, consultations and all assurance and other attestation engagements.
-
Corporate and business tax
Our trusted teams can prepare corporate tax files and ruling requests, support you with deferrals, accounting procedures and legitimate tax benefits.
-
Direct international tax
Our teams have in-depth knowledge of the relationship between domestic and international tax laws.
-
Global mobility services
Through our global organisation of member firms, we support both companies and individuals, providing insightful solutions to minimise the tax burden for both parties.
-
Indirect international tax
Using our finely tuned local knowledge, teams from our global organisation of member firms help you understand and comply with often complex and time-consuming regulations.
-
Transfer pricing
The laws surrounding transfer pricing are becoming ever more complex, as tax affairs of multinational companies are facing scrutiny from media, regulators and the public
-
Africa tax desk
A differentiating solution adapted to the context of your investments in Africa.
-
Banking Holding banking to account: the real diversity and inclusion pictureWe explore how the banking sector can continue to attract, retain and nurture women to build a more diverse and inclusive future.
-
Sustainability From voluntary to mandatory ESG: How banks can future-proof their operationsAs we move from voluntary ESG initiatives to mandatory legislation, we explore what the banking sector needs to prioritise.
-
IFRS IFRS 9 - Audit of Expected Credit LossesGPPC releases The Auditor’s response to the risks of material misstatement posed by estimates of expected credit losses under IFRS 9
-
growthiQ Steering your company to long-term successHistory has something important to tell us about the difficulties of steering a business to long-term success – through seismic shifts in technology, consumer demands and product development. With that in mind it’s unsurprising that over half the world’s largest companies in the early 1900s had shut their doors by the late 1990s. Some, however, have endured.
-
International Financial Reporting Standards Implementation of IFRS 17 ‘Insurance Contracts’The auditor’s response to the risks of material misstatement arising from estimates made in applying IFRS 17 ‘Insurance Contracts’
-
IFRS Get ready for IFRS 17After twenty years of development the IASB has published IFRS 17 ‘Insurance Contracts’, find out more.
-
Global business pulse - industry analysis Mid-market recovery spreads to more industriesThe index results for 13 key industries of the mid-market reveals a very uneven recovery from COVID-19
-
Global business pulse - industry analysis A very uneven recovery across industriesThe index results for 13 key industries of the mid-market reveals a very uneven recovery from COVID-19
-
Global business pulse - Sector analysis Clear patterns of damage from COVID-19 across the industriesThe index results for 12 key sectors of the mid-market reveal just how much or little the various parts of the economy were impacted by COVID-19.
-
Not for profit Mission: possible – putting impact at the heart of charityGlobal charitable continues to decline and charity leaders are increasingly looking at their own unique impact journey.
-
Access to finance Raise finance to invest in changePrepare your business to raise finance to invest in change.
-
Private equity firms Private equity in the mid-market: reshaping strategies for 2021When the global COVID-19 pandemic stormed across the globe in early 2020, the private equity sector was hit hard but deals are coming back to the market.
-
Mid-market businesses Getting ready for private equity investmentOur specialists explore how private equity firms are now working with their portfolios and how the mid-market can benefit from investment.
-
Mid-market businesses Myth-busting private equityNervous about partnering with Private Equity? We explore some of the common myths we come across when speaking to mid-market businesses about PE investment.
-
Public sector Helping build the government of tomorrow, todayLearn about the Grant Thornton US public sector team.
-
Global business pulse - industry analysis Mid-market recovery spreads to more industriesThe index results for 13 key industries of the mid-market reveals a very uneven recovery from COVID-19
-
Global business pulse - industry analysis A very uneven recovery across industriesThe index results for 13 key industries of the mid-market reveals a very uneven recovery from COVID-19
-
Global business pulse - Sector analysis Clear patterns of damage from COVID-19 across the industriesThe index results for 12 key sectors of the mid-market reveal just how much or little the various parts of the economy were impacted by COVID-19.
-
Industries European Real Estate PodcastJessica Patel, Tax Partner at Grant Thornton UK speaks with tax partners and directors across the network to share their insights on the real estate market and some of the challenges.
-
Industries European Real Estate PodcastJessica Patel, Tax Partner at Grant Thornton UK speaks with tax partners and directors across the network to share their insights on the real estate market and some of the challenges.
-
Global business pulse - industry analysis Mid-market recovery spreads to more industriesThe index results for 13 key industries of the mid-market reveals a very uneven recovery from COVID-19
-
Global business pulse - industry analysis A very uneven recovery across industriesThe index results for 13 key industries of the mid-market reveals a very uneven recovery from COVID-19
-
-
Global business pulse - industry analysis Mid-market recovery spreads to more industriesThe index results for 13 key industries of the mid-market reveals a very uneven recovery from COVID-19
-
Global business pulse - industry analysis A very uneven recovery across industriesThe index results for 13 key industries of the mid-market reveals a very uneven recovery from COVID-19
-
Retail How retail is positioning for successCOVID-19 provided some hard lessons for the retail industry. It is time to turn those into sustainable and well executed growth strategies in 2021.
-
Telecoms Can tech and telecom leverage economic headwindsAs most businesses brace for an economic downturn, tech and telecom could see new prospects. But, to turn the headwinds to your advantage, you need to find your unique opportunities and risks.
-
Technology Mid-market tech companies lead the way on diversity and inclusionWe explore how the mid-market tech sector can continue to build and nurture a culture that’s increasingly more diverse and inclusive for women.
-
Tax Resetting global tax rules after the pandemicBusinesses are seeing rising challenges, and finance heads are dealing with a range of new measures. To say the next 12 months are critical for businesses is an understatement.
-
TECHNOLOGY International tax reform: the potential impact on the technology industryIn this article, we’ve summarised key elements of the global tax reform proposals, their potential impact on technology industry and advice from our digital tax specialists on what technology companies can do to prepare.
-
Telecoms Can tech and telecom leverage economic headwindsAs most businesses brace for an economic downturn, tech and telecom could see new prospects. But, to turn the headwinds to your advantage, you need to find your unique opportunities and risks.
-
TMT TMT industry: Fully charged or on standby?Our research revealed five key trends that resonated with Technology, Media and Telecoms (TMT) industry leaders around the world. We asked a panel of our experts from UK, US, India Ireland and Germany, to give us their reaction to the findings.
-
Cybersecurity One size fits nothingTechnology companies must adopt a new approach to digital risk: those that successfully develop a reputation for digital trust by demonstrating an unwavering commitment to cyber security and data privacy will be able to carve out a competitive advantage.
-
Technology, media & telecommunications Why it’s time for a 5G reality checkFigures suggest the mobile sector is maturing. While data usage continues to soar, mobile revenues are expected to flatten out over the next few years.
-
International business Mid-market businesses lifted by rising tide of optimismOptimism among global mid-market business leaders rose to 67% in the first half of this year and they are markedly more optimistic about their prospects with global optimism having increased by 8%.
-
Global business pulse - industry analysis Mid-market recovery spreads to more industriesThe index results for 13 key industries of the mid-market reveals a very uneven recovery from COVID-19
-
Hotels COVID-19: Checking in with the hotel industry one year onCOVID-19 provided some hard lessons for the hotel sector. It is time to turn those into sustainable and well executed growth strategies.
-
Global business pulse - industry analysis A very uneven recovery across industriesThe index results for 13 key industries of the mid-market reveals a very uneven recovery from COVID-19
- By topic
-
Women in Business 2024
2024 marks the 20th year of monitoring and measuring the proportion of women occupying senior management roles around the world.
-
COP28: Mid-market firms should seize the opportunity from adaption and innovation
COP28 was the first time there has been a global stocktake on progress against the Paris Agreement.
-
Scanning the horizon: Mid-market sets sights on global trade growth
The latest International Business Report (IBR) data shows that mid-market businesses have high expectations for global trade.
-
Mid-market sees business optimism reach record high
Grant Thornton's latest International Business Report (IBR) sees optimism among mid-market business leaders reach a record high with 74% optimistic about the outlook for their economy over the next 12 months.
-
Women in tech: A pathway to gender balance in top tech roles
Grant Thornton’s 2024 Women in Business data suggests we are far from achieving parity within the mid-market technology sector.
-
Women in leadership: a pathway to better performance
What makes the benefits of gender parity compelling is the impact it can have on commercial performance.
-
Women in Business 2024
2024 marks the 20th year of monitoring and measuring the proportion of women occupying senior management roles around the world.
-
Women in business: Regional picture
We saw an increase in the percentage of senior management roles held by women, on a global level, but there are some significant regional and country variations.
-
Pathways to Parity: Leading the way
To push towards parity of senior management roles held by women, who leads within an organisation is vital.
-
Generating real change with a long-term focus
The most successful strategy to achieve parity of women in senior management is one which stands alone, independent of an ESG strategy.
-
People at the heart of great business
Businesses have started to put guidelines and incentives in place, focused on driving employees back to the office.
-
Focusing and developing a solid strategy around diversity, equity and inclusion
Grant Thornton Greece is pioneering a growing set of diversity, equity and inclusion (DE&I) initiatives that centre around three strategic pillars.
-
Ten considerations for preparing TCFD climate-related financial disclosures
Insights for organisations preparing to implement the International Sustainability Standards Board (ISSB)’s Standards.
-
COP28
COP28 was the first time there has been a global stocktake on progress against the Paris Agreement.
-
Transition Plan Taskforce publishes its final disclosure framework
As organisations in the private sector make commitments and plans to reach net zero, there's a growing need for stakeholders to be able to assess the credibility of their transition plans.
-
Promoting ESG excellence through tax
ESG considerations have never been more important for an organisation’s long-term success, but how can tax be used to add value to an ESG agenda?
-
International business: Mid-market growth and expansion
The mid-market looks to international business opportunities for growth.
-
Top five constraints to international business in the mid-market
Top five major constraints that are testing the mid-market’s ability to grow their businesses internationally.
-
Brand and international marketing – breaking global barriers
Brand has been identified as a key driver of mid-market success when looking to grow and develop international business.
-
The key to international business: Investing in people
How can recruitment and retention help grow international business?
-
Building resilience in international business
Evolving supply chains and trade patterns amid ongoing global uncertainty.
-
IFRS Alerts
IFRS Alerts covering the latest changes published by the International Accounting Standards Board (IASB).
-
Example Financial Statements
General guidance for preparers of financial statements that supports the commitment to high quality, consistent application of IFRS.
-
Insights into IFRS 2
Insights into IFRS 2 summarises the key areas of the Standard, highlighting aspects that are more difficult to interpret and revisiting the most relevant features that could impact your business.
-
IFRS 3
Mergers and acquisitions are becoming more common as entities aim to achieve their growth objectives. IFRS 3 ‘Business Combinations’ contains the requirements for these transactions.
-
IFRS 8
Our ‘Insights into IFRS 8’ series considers some key implementation issues and includes interpretational guidance in certain problematic areas.
-
IFRS 16
Are you ready for IFRS 16? This series of insights will help you prepare.
-
IAS 36
Insights into IAS 36 provides assistance for preparers of financial statements and help where confusion has been seen in practice.
-
IFRS 17
Explaining the key features of the Standard and providing insights into its application and impact.
-
Pillar 2
Key updates and support for the global implementation of Pillar 2.
-
Global expatriate tax guide
Growing businesses that send their greatest assets – their people – overseas to work can face certain tax burdens, our global guide highlights the common tax rates and issues.
-
International indirect tax guide
Navigating the global VAT, GST and sales tax landscape.
-
Global transfer pricing guide
Helping you easily find everything you need to know about the rules and regulations regarding transfer pricing and Country by Country reporting for every country you do business with.
Indirect tax snapshot
Please click on each section to expand further:
Value-Added Tax (VAT) was introduced in the UAE on the 1st January 2018 and is the principal indirect tax in the UAE in addition to Excise tax on some products and Customs duty on imports of selected goods.
VAT is a tax on consumption that is applied on the supply of most goods and services in UAE. It is also applied to goods when imported into the country. Although VAT is ultimately borne by the consumer by being included in the price paid, the responsibility for charging, collecting and paying it to the Federal Tax Authority (“FTA”) at each stage of the supply chain rests with the registered business (including individuals) making the supply.
A business registered for the tax will charge VAT (output tax) on its sales/services, and incur VAT (input tax) on its purchases (including any VAT paid at importation).
The difference between the output tax and the deductible input tax in each accounting period will be the amount of VAT payable by the business to the FTA. Where the input tax exceeds the output tax, the excess recoverable tax can be carried forward to subsequent tax periods and used to offset against payable tax and/ or penalties, or one can apply for a refund at any point in time.
A transaction falls within the scope of UAE VAT if the following conditions are met:
- it is either a supply of goods or services for consideration or a deemed The terms ‘supply’ and ‘deemed supply’ have been defined separately for goods and services in the legislation
- the place of supply is in the UAE
- it is made by a taxable person conducting business in the For these purposes, a taxable person is a person or entity who is registered for VAT in the UAE or has a liability to become registered.
There are two rates of VAT that are applied to goods and services in UAE; the standard rate of 5% and the zero rate. In addition, some goods and services are exempt from VAT or outside the scope of VAT.
Businesses that make exempt supplies are unable to claim the input tax they incur, so the VAT paid to the suppliers will be a ‘real’ cost.
All goods imported into the UAE from outside the UAE are generally subject to VAT. Registered businesses are eligible to defer the liability under reverse charge mechanism until the time of filing the return.
However, non-VAT registered businesses need to pay VAT at the time of importation.
There are special rules governing transactions related to Designated Zones (DZ) in the UAE. A qualified supply of goods within a DZ is outside the scope of VAT (subject to certain conditions and restrictions). Further, any goods procured from outside the UAE into a DZ is not considered as an import and therefore no Customs duty or VAT is applicable.
However, when goods move from a DZ to the Mainland in the UAE, it is treated as an import transaction and Customs duty and VAT is levied at that stage. Until recently, there was no concession given to services provided from and to a DZ. However, legislation has been amended to allow qualified shipping and delivery services within a DZ to be outside the scope of VAT in certain instances.
VAT in the UAE is an intricate subject developing alongside the country’s vision to grow as an economic hub. The FTA has issued over 50 Public Guides and Clarifications since VAT was implemented in 2018 to assist taxpayers in determining their VAT obligations.
In addition to VAT, excise tax is another prominent indirect tax which was implemented in the UAE in October 2017 and expanded in December 2019. This “sin tax”, as it is colloquially known, is levied on specific goods that have been identified as harmful to human health or the environment including the following:
- tobacco and tobacco products – 100% tax (since 2017)
- electronic smoking devices and associated liquids – 100% tax (since 2019)
- energy drinks – 100% tax (from 2017)
- carbonated drinks – 50% tax (from 2017)
- sweetened drinks – 50% tax (from 2019)
There is no threshold for excise tax. Thus, producers, importers, and stockpilers must register for excise tax if their business is involved with any excise product. Goods released from a DZ may also be subjected to excise tax. Producers and importers of excise products are specifically required to generate a Retail Selling Price (RSP) list of excise goods when registering for excise tax.
Registered entities must file excise returns by the 15th day of each month to report the excise liability arising from the prior month. Similar to VAT, the final consumer will ultimately bear the excise cost as the excise tax is inclusive in the final price of the product.
A taxable person who either makes or intends to make taxable supplies of goods and services in the course of a business must register for VAT if the total value of all supplies exceeds the mandatory registration threshold of AED 375,000 in the previous 12 months period, or it is anticipated that the total value of all supplies will exceed the mandatory registration threshold
in the next 30 days. Article 19 of the VAT Law specifies the supplies that should be considered to calculate the threshold.
A taxable person who does not qualify for registration as per the above threshold can opt for voluntary registration as well, if the total value of supplies, or expenses which are subject to tax, exceed AED 187,500 in the previous 12-month period or will exceed the said threshold in the next 30 days.
Two or more persons conducting business in UAE may apply to register as a Tax Group if all the following conditions are satisfied:
- each member has a Place of Establishment or Fixed Establishment in the UAE
- the members are related to each other, as defined by the VAT Law
- one or more persons conducting business in a partnership will control the others
- each member is a legal entity (not a natural person) that is carrying on business in the UAE
- none of the members are already part of another VAT group.
A person cannot be treated as a member of more than one VAT group at a time. Further, an individual cannot be part of a VAT Group.
The main advantage of VAT group registration is that any supply of goods or services by a member of the group to another member of the group is disregarded for VAT purposes. This reduces the risk of VAT being accidentally omitted on supplies between separately registered related parties.
However, there are some disadvantages and any decision on whether to register as a tax group should be carefully assessed. For example, all VAT group members (including former
members) are jointly and severally liable for the VAT debt of the group during the period of their membership.
A penalty of AED 10,000 may be imposed by the FTA if a business fails to register for VAT or excise tax within 30 days of being required to register (i.e., breaching or expecting to breach the threshold).
A Taxable Person making only zero-rated supplies may be excepted from mandatory tax registration if the Authority accepts the exception request.
No. There is no threshold for non-resident businesses to obtain a VAT registration when they make taxable supplies in the UAE and no other person is obligated to pay tax. In other words, where a non-resident business makes supplies in UAE and there is no other person to account for tax (usually via the reverse-charge mechanism), the overseas business needs to obtain registration in UAE, irrespective of the value of the supplies.
Supplies of electronic/digital services are covered by special “place of supply” provisions for Telecommunication and Electronic services. The place of supply for such services is determined by the actual use and enjoyment of the services, regardless of the place of contract or payment. Accordingly, for electronic or digital services, the place of supply is in the UAE where the use and enjoyment of the services is within UAE. The place of supply is outside of the UAE where the use and enjoyment of the service is outside of the UAE.
For B2B transactions, local businesses will have to account for the tax due under the Reverse Charge Mechanism as it is considered an importation of services.
For B2C transactions, where the private consumer is not obligated to pay tax, an unregistered non-resident supplier must register on a mandatory basis.
No
In the UAE, the standard tax period is three calendar months as prescribed by the Authority. However, the FTA may at its discretion assign a monthly tax period.
Businesses may also request to amend the Tax Period assigned to it, which the FTA may accept at its discretion.
All VAT returns must be submitted online to the FTA by 28th day of the month following the end of the relevant tax period or by any other date as may be notified. Where the payment is due to the FTA, it must be paid by the same deadline. Where the due date of the submission of the VAT Return and the corresponding payment falls on a weekend or a national holiday, the deadline for filing the VAT
Return or making a payment is extended to the first business day thereafter.
Penalties may be imposed by the FTA if VAT or excise returns that are not submitted on time or the related tax is not paid by the due date.
When the return is not submitted to the FTA by the due date, a fine of 1,000 AED is imposed for the first time, and 2,000 AED in case of repetition with 24 months.
When there is delay in payment of VAT or excise tax to the FTA, following penalties can be levied:
- 2% penalty of the unpaid tax due immediately once the payment of the Payable Tax is late
- a further 4% monthly penalty is due one month following the deadline for payment, and on the same date monthly thereafter, on the unsettled tax amount
The maximum late payment penalty cannot exceed 300% of the Payable Tax.
No
Yes. A range of penalties can be imposed when businesses do not comply with VAT Law and Rules.
Penalties can be applied for non-compliance with the tax procedures such as failure to keep adequate records, failure to obtain registration within the prescribed timelines, failure to provide information (including additional disclosures) when requested by the Authority in the requested language, and failure to comply with the Decree Law and Executive Regulation requirements.
Cabinet Decision No. 49 of 2021 has recently been issued to amend the penalties levied for noncompliance with the Law. The Decision alleviates taxpayers by reducing the majority of the penalties and rewarding those who quickly disclose their errors by way of a voluntary disclosure.
Yes, the business visitor refund scheme allows business visitors to recover VAT, provided that all the required conditions specified in the Law are satisfied. One such condition requires that the country in which the overseas business is resident offers a reciprocal refund to UAE businesses when visiting that country.
A valid tax invoice must show:
- the words ‘Tax Invoice’ clearly displayed
- the name, address and TRN of the Registrant making the supply
- the name, address and TRN of the Recipient where he is a Registrant
- an invoice number which is unique and sequential
- the date of issuing the Tax Invoice
- the date of supply if different from the date the Tax Invoice is issued
- a description of goods or services supplied
- for each good or service, the unit price, the quantity or volume supplied, the rate of Tax and the amount payable expressed in AED
- the amount of any discount offered
- the gross amount payable expressed in AED
- the tax amount payable expressed in AED together with the rate of exchange applied where the currency is converted from a currency other than the UAE dirham
- where the invoice relates to a supply under which the Recipient of Goods or Services is required to account for Tax, a statement that the Recipient is required to account for Tax and a reference to the relevant provision of the Decree
Where a business makes supplies of goods or services to a recipient that is a non-registrant, or the value of the consideration for the supply of goods or services does not exceed AED 10,000 to the recipient who is a registrant, a simplified tax invoice may be issued instead. The following must be included in simplified invoices:
- The words “Tax Invoice” clearly displayed on the invoice.
- The name, address, and Tax Registration Number of the Registrant making the supply.
- The date of issuing the Tax Invoice.
- A description of the Goods or Services supplied.
- The total Consideration and the Tax amount charged.
Tax invoices can be issued in an electronic format without prior approval from the Federal Tax Authority (provided the conditions as prescribed by the Federal Tax Authority are fulfilled). Electronic invoices must contain the same information as paper invoices.
No. However, this has been implemented in Saudi Arabia and is expected to be introduced to the UAE and other GCC countries soon.
Contact us
For further information on indirect tax in United Arab Emirates please contact:
Steve Kitching |
Please click on each section to expand further:
Value-Added Tax (VAT) was introduced in the UAE on the 1st January 2018 and is the principal indirect tax in the UAE in addition to Excise tax on some products and Customs duty on imports of selected goods.
VAT is a tax on consumption that is applied on the supply of most goods and services in UAE. It is also applied to goods when imported into the country. Although VAT is ultimately borne by the consumer by being included in the price paid, the responsibility for charging, collecting and paying it to the Federal Tax Authority (“FTA”) at each stage of the supply chain rests with the registered business (including individuals) making the supply.
A business registered for the tax will charge VAT (output tax) on its sales/services, and incur VAT (input tax) on its purchases (including any VAT paid at importation).
The difference between the output tax and the deductible input tax in each accounting period will be the amount of VAT payable by the business to the FTA. Where the input tax exceeds the output tax, the excess recoverable tax can be carried forward to subsequent tax periods and used to offset against payable tax and/ or penalties, or one can apply for a refund at any point in time.
A transaction falls within the scope of UAE VAT if the following conditions are met:
- it is either a supply of goods or services for consideration or a deemed The terms ‘supply’ and ‘deemed supply’ have been defined separately for goods and services in the legislation
- the place of supply is in the UAE
- it is made by a taxable person conducting business in the For these purposes, a taxable person is a person or entity who is registered for VAT in the UAE or has a liability to become registered.
There are two rates of VAT that are applied to goods and services in UAE; the standard rate of 5% and the zero rate. In addition, some goods and services are exempt from VAT or outside the scope of VAT.
Businesses that make exempt supplies are unable to claim the input tax they incur, so the VAT paid to the suppliers will be a ‘real’ cost.
All goods imported into the UAE from outside the UAE are generally subject to VAT. Registered businesses are eligible to defer the liability under reverse charge mechanism until the time of filing the return.
However, non-VAT registered businesses need to pay VAT at the time of importation.
There are special rules governing transactions related to Designated Zones (DZ) in the UAE. A qualified supply of goods within a DZ is outside the scope of VAT (subject to certain conditions and restrictions). Further, any goods procured from outside the UAE into a DZ is not considered as an import and therefore no Customs duty or VAT is applicable.
However, when goods move from a DZ to the Mainland in the UAE, it is treated as an import transaction and Customs duty and VAT is levied at that stage. Until recently, there was no concession given to services provided from and to a DZ. However, legislation has been amended to allow qualified shipping and delivery services within a DZ to be outside the scope of VAT in certain instances.
VAT in the UAE is an intricate subject developing alongside the country’s vision to grow as an economic hub. The FTA has issued over 50 Public Guides and Clarifications since VAT was implemented in 2018 to assist taxpayers in determining their VAT obligations.
In addition to VAT, excise tax is another prominent indirect tax which was implemented in the UAE in October 2017 and expanded in December 2019. This “sin tax”, as it is colloquially known, is levied on specific goods that have been identified as harmful to human health or the environment including the following:
- tobacco and tobacco products – 100% tax (since 2017)
- electronic smoking devices and associated liquids – 100% tax (since 2019)
- energy drinks – 100% tax (from 2017)
- carbonated drinks – 50% tax (from 2017)
- sweetened drinks – 50% tax (from 2019)
There is no threshold for excise tax. Thus, producers, importers, and stockpilers must register for excise tax if their business is involved with any excise product. Goods released from a DZ may also be subjected to excise tax. Producers and importers of excise products are specifically required to generate a Retail Selling Price (RSP) list of excise goods when registering for excise tax.
Registered entities must file excise returns by the 15th day of each month to report the excise liability arising from the prior month. Similar to VAT, the final consumer will ultimately bear the excise cost as the excise tax is inclusive in the final price of the product.
A taxable person who either makes or intends to make taxable supplies of goods and services in the course of a business must register for VAT if the total value of all supplies exceeds the mandatory registration threshold of AED 375,000 in the previous 12 months period, or it is anticipated that the total value of all supplies will exceed the mandatory registration threshold
in the next 30 days. Article 19 of the VAT Law specifies the supplies that should be considered to calculate the threshold.
A taxable person who does not qualify for registration as per the above threshold can opt for voluntary registration as well, if the total value of supplies, or expenses which are subject to tax, exceed AED 187,500 in the previous 12-month period or will exceed the said threshold in the next 30 days.
Two or more persons conducting business in UAE may apply to register as a Tax Group if all the following conditions are satisfied:
- each member has a Place of Establishment or Fixed Establishment in the UAE
- the members are related to each other, as defined by the VAT Law
- one or more persons conducting business in a partnership will control the others
- each member is a legal entity (not a natural person) that is carrying on business in the UAE
- none of the members are already part of another VAT group.
A person cannot be treated as a member of more than one VAT group at a time. Further, an individual cannot be part of a VAT Group.
The main advantage of VAT group registration is that any supply of goods or services by a member of the group to another member of the group is disregarded for VAT purposes. This reduces the risk of VAT being accidentally omitted on supplies between separately registered related parties.
However, there are some disadvantages and any decision on whether to register as a tax group should be carefully assessed. For example, all VAT group members (including former
members) are jointly and severally liable for the VAT debt of the group during the period of their membership.
A penalty of AED 10,000 may be imposed by the FTA if a business fails to register for VAT or excise tax within 30 days of being required to register (i.e., breaching or expecting to breach the threshold).
A Taxable Person making only zero-rated supplies may be excepted from mandatory tax registration if the Authority accepts the exception request.
No. There is no threshold for non-resident businesses to obtain a VAT registration when they make taxable supplies in the UAE and no other person is obligated to pay tax. In other words, where a non-resident business makes supplies in UAE and there is no other person to account for tax (usually via the reverse-charge mechanism), the overseas business needs to obtain registration in UAE, irrespective of the value of the supplies.
Supplies of electronic/digital services are covered by special “place of supply” provisions for Telecommunication and Electronic services. The place of supply for such services is determined by the actual use and enjoyment of the services, regardless of the place of contract or payment. Accordingly, for electronic or digital services, the place of supply is in the UAE where the use and enjoyment of the services is within UAE. The place of supply is outside of the UAE where the use and enjoyment of the service is outside of the UAE.
For B2B transactions, local businesses will have to account for the tax due under the Reverse Charge Mechanism as it is considered an importation of services.
For B2C transactions, where the private consumer is not obligated to pay tax, an unregistered non-resident supplier must register on a mandatory basis.
No
In the UAE, the standard tax period is three calendar months as prescribed by the Authority. However, the FTA may at its discretion assign a monthly tax period.
Businesses may also request to amend the Tax Period assigned to it, which the FTA may accept at its discretion.
All VAT returns must be submitted online to the FTA by 28th day of the month following the end of the relevant tax period or by any other date as may be notified. Where the payment is due to the FTA, it must be paid by the same deadline. Where the due date of the submission of the VAT Return and the corresponding payment falls on a weekend or a national holiday, the deadline for filing the VAT
Return or making a payment is extended to the first business day thereafter.
Penalties may be imposed by the FTA if VAT or excise returns that are not submitted on time or the related tax is not paid by the due date.
When the return is not submitted to the FTA by the due date, a fine of 1,000 AED is imposed for the first time, and 2,000 AED in case of repetition with 24 months.
When there is delay in payment of VAT or excise tax to the FTA, following penalties can be levied:
- 2% penalty of the unpaid tax due immediately once the payment of the Payable Tax is late
- a further 4% monthly penalty is due one month following the deadline for payment, and on the same date monthly thereafter, on the unsettled tax amount
The maximum late payment penalty cannot exceed 300% of the Payable Tax.
No
Yes. A range of penalties can be imposed when businesses do not comply with VAT Law and Rules.
Penalties can be applied for non-compliance with the tax procedures such as failure to keep adequate records, failure to obtain registration within the prescribed timelines, failure to provide information (including additional disclosures) when requested by the Authority in the requested language, and failure to comply with the Decree Law and Executive Regulation requirements.
Cabinet Decision No. 49 of 2021 has recently been issued to amend the penalties levied for noncompliance with the Law. The Decision alleviates taxpayers by reducing the majority of the penalties and rewarding those who quickly disclose their errors by way of a voluntary disclosure.
Yes, the business visitor refund scheme allows business visitors to recover VAT, provided that all the required conditions specified in the Law are satisfied. One such condition requires that the country in which the overseas business is resident offers a reciprocal refund to UAE businesses when visiting that country.
A valid tax invoice must show:
- the words ‘Tax Invoice’ clearly displayed
- the name, address and TRN of the Registrant making the supply
- the name, address and TRN of the Recipient where he is a Registrant
- an invoice number which is unique and sequential
- the date of issuing the Tax Invoice
- the date of supply if different from the date the Tax Invoice is issued
- a description of goods or services supplied
- for each good or service, the unit price, the quantity or volume supplied, the rate of Tax and the amount payable expressed in AED
- the amount of any discount offered
- the gross amount payable expressed in AED
- the tax amount payable expressed in AED together with the rate of exchange applied where the currency is converted from a currency other than the UAE dirham
- where the invoice relates to a supply under which the Recipient of Goods or Services is required to account for Tax, a statement that the Recipient is required to account for Tax and a reference to the relevant provision of the Decree
Where a business makes supplies of goods or services to a recipient that is a non-registrant, or the value of the consideration for the supply of goods or services does not exceed AED 10,000 to the recipient who is a registrant, a simplified tax invoice may be issued instead. The following must be included in simplified invoices:
- The words “Tax Invoice” clearly displayed on the invoice.
- The name, address, and Tax Registration Number of the Registrant making the supply.
- The date of issuing the Tax Invoice.
- A description of the Goods or Services supplied.
- The total Consideration and the Tax amount charged.
Tax invoices can be issued in an electronic format without prior approval from the Federal Tax Authority (provided the conditions as prescribed by the Federal Tax Authority are fulfilled). Electronic invoices must contain the same information as paper invoices.
No. However, this has been implemented in Saudi Arabia and is expected to be introduced to the UAE and other GCC countries soon.