VAT Services
Value Added Tax (VAT) is a consumption tax applicable for all goods and services as its value is increased each stage of its production or distribution or services lines. It is an indirect tax that is related to a taxpayer’s consumption and not their income. The VAT is applicable in more than 160 countries. VAT, at the rate of 5%, shall be introduced in the UAE.
In UAE, those businesses whose value of taxable goods and supplies exceed AED 375,000.00 must do VAT registration. Whereas, VAT registration is not permitted for businesses whose value of taxable goods and supplies is less than this value but over 187,500.00.
Free Zones Exempt from VAT
As per the recent notification from the Federal Tax Authority, there are 20 free zones in the UAE would be exempt from VAT. These are being referred to as ‘designated zones’. The areas included are largely fenced free zones with special controls on goods, rather than areas such as Dubai Media City, Sharjah Media City or those dealing in financial services.