UAE is a country where businesses do not have to pay a large share of their income in taxes. This has always been a major attraction for foreign investors to start their companies in the country.
Individuals are not subject to income tax in the UAE. However, it imposes corporate taxes on foreign banks and energy firms. So, VAT is a tax included at every stage of the production and delivery of the product where the company has contributed value.
VAT was introduced in 2018 in the UAE. The consumer contributes VAT, and the business must collect VAT and send it back to the government. If the business is not doing so, then it could lead to serious penalties. Currently, a 5% VAT is charged at the point of sale in UAE.
VAT of 5% equally applies to businesses conducting operations on the mainland or free zones in the UAE. Typically, VAT-registered businesses:
When you start a business setup in Dubai free zone, the VAT taxations are a little different with their own set of laws, these are:
The applicant who wants to register for VAT must file an application with the FTA online and complete all the required procedures.
5% VAT is applicable along with the cost of taxable goods and services in the UAE.
If you deal in financial services, residential buildings, supply of bare land, and local traveling services then you are not liable to pay VAT.
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