What is the VAT rate in Dubai in 2024 ?

What is the VAT rate in Dubai?

First of all, it is important to understand that VAT applies to most products and services sold in the UAE, except in certain specific cases where exemptions or reduced rates apply. Businesses must collect VAT on their sales and remit it to the tax authorities.

Regarding updates to the VAT law, a new list of products and services subject to VAT exemption was introduced in 2023, which includes items such as medical supplies, pharmaceuticals, educational and research services, and cultural and sporting activities. Businesses operating in these sectors may be exempt from VAT, but it is important to check with the tax authorities for details of the exemption.

It should also be noted that the standard rate of VAT in the UAE is 5%, although certain products and services may be subject to a reduced rate of 0% or 50%. Businesses should update their accounting and invoicing systems to reflect the latest VAT rates.

What are the VAT regulations in Dubai?

The United Arab Emirates, including Dubai, have introduced a VAT (Value Added Tax) system with a standard rate of 5%. Here are some of the regulations and general information concerning VAT in Dubai and the United Arab Emirates:

VAT rate: The standard rate of VAT applied in the United Arab Emirates, including Dubai, is 5%. This means that VAT is added to the final sale price of certain goods and services.

VAT registration: Businesses whose annual turnover exceeds a certain threshold must register for VAT and charge VAT on their sales. Thresholds may vary and exemptions may apply to certain small businesses.

VAT invoicing: VAT-registered businesses must charge VAT on their sales and indicate the amount of VAT on invoices and receipts issued to customers.

Filing and paying VAT: Businesses must periodically file VAT returns with the tax authorities and pay the VAT due. The frequency of filing may vary depending on the size and type of business.

Exceptions and exemptions: Certain supplies of goods and services may be exempt or subject to a reduced rate of VAT, e.g. financial services, medical care and insurance.

VAT reclaim: VAT-registered businesses may also be entitled to reclaim VAT paid on purchases and expenses related to their business activities.

Compliance: Businesses must comply with VAT rules on invoicing, record keeping, reporting and payment. Non-compliance can result in fines and other penalties.

Tax regulations are subject to change, so it is strongly recommended to check the latest information with the relevant tax authorities or consult tax experts before making important business decisions.

How do I know if my company is liable for VAT in Dubai 2024?

If you are a business operating in Dubai or the United Arab Emirates, you may be liable for VAT (Value Added Tax) depending on your activity and turnover. Here are a few guidelines to help you determine whether your business could be liable for VAT in Dubai 2024 :

Turnover: If your turnover exceeds the threshold set by the tax authorities, you may be required to register for VAT and collect VAT on your sales.

Nature of business: VAT may apply to certain categories of goods and services. If your business sells goods or provides services that are subject to VAT, you may be affected.

Exports: If your business exports goods outside the United Arab Emirates, you may be eligible for a 0% VAT exemption on these exports.

Imports: If your business imports goods into the UAE, you may be liable to pay VAT on imports.

International affiliations: If your business has affiliations with foreign entities, this could also have implications for how VAT is applied.

To whom does 0% VAT apply in Dubai?

While Value Added Tax is 5% on the majority of goods and services sold in the Emirates, some businesses can claim 0% tax. These companies include :

• Companies that export goods and services outside the Gulf countries (e.g.: you invoice a French customer? You won’t charge VAT on it).
• Companies specialising in international transport.
• Companies capable of selling/letting new residential accommodation within 3 years of its construction.
• Companies supplying specific means of sea or air transport (aircraft, ships).
• Companies that provide certain services and goods related to education.
• Companies providing certain health-related services and goods.
• Companies specialising in the sale of precious metals (gold, silver, etc.).

Are there any VAT-free zones?

By setting up your mainland, freezone or offshore company in certain free zones in Dubai, you may be exempt from VAT in the Emirates. These are as follows :

• Jebel ALi free zone
• Dubai Cars and Automotive
• Dubai Textile City
• Dubai Aviation City
• Al Quoz Free Zone
• Al Qusais
• Dubai Airport

How do you declare VAT?

The procedure for declaring VAT (Value Added Tax) in Dubai and the United Arab Emirates involves several important steps to ensure that you meet your tax obligations. Here is a general overview of how to declare your VAT in Dubai 2024 :

1) Filing frequency: You will need to check how often you need to file your VAT returns. Businesses may be required to file monthly or quarterly, depending on their annual turnover.

2) Preparing the data: Before submitting a VAT return, make sure that your financial data, including sales, purchases, expenses and VAT payments, are correctly recorded in your accounting systems.

3) Access to the online portal: Log in to your account on the UAE Tax Authorities online portal. You will need your identification details to access your account.

4) Complete the return: On the portal, look for the section dedicated to VAT returns and start filling in the return form. You will need to provide information on your sales, purchases and the amounts of VAT collected and paid.

5) Check and submit: Carefully review all the information you have entered to ensure that it is correct and accurate. Once you are sure that everything is correct, submit the return electronically.

6) Payment of VAT: If you have VAT amounts to pay, make sure you meet the payment deadlines indicated on the portal. You can usually make the payment online via the accepted payment options.

7) Confirmation and receipt: Once you have submitted the declaration and made the payment, you will receive electronic confirmation of your declaration and a payment receipt.

8) Archiving: Carefully retain all VAT return receipts and confirmations, as well as the relevant accounting records, in accordance with tax record retention requirements.

Following these steps precisely is essential to ensure that you meet your tax obligations. However, please note that tax regulations can change, so it is advisable to check the latest information on the official UAE tax authorities portal or consult tax experts for advice specific to your situation. For more detailed advice and personalised assistance, contact us and let us help and support you with our local partners.