Value Added Tax (VAT) is a complex type of tax, which often causes significant worry to the taxpayers. However, it is equally important and beneficial for them. It boosts the cash flow and the profits of the business organizations. It also builds their credibility in the market as a taxpayer, which also contributes to boosting the progress of their business.
VAT became functional in the UAE at the start of 2018. The terms and conditions of VAT application are different for various types of products and services in the region. This is the main reason taxpayers feel difficulty in calculating and paying the amount. Moreover, not all services and supplies are liable to VAT payment in the region.
Failing to comply with VAT specifications make the taxpayer face penalties. Therefore, most of the taxpayers and business organizations hire the services of best VAT consultancy in Dubai and ensure that they follow all the VAT requirements and maximize their profits.
This article will help you explore some common supplies and services in the UAE, which are exempted from VATpayment.
Top 4 VAT Exempted Supplies in the UAE
Knowing about the products and services on which VAT is applicable is quite important. However, there are some supplies and services which are exempted from VAT payment in the UAE, knowing about them is also quite important to ensure their sound progress.
The following are some of the most important supplies which are exempted from VAT payment in the UAE.
1. Financial Services
The very first service or supply which has got an exemption from VAT payment in the UAE is the financial services. There are a number of financial services, and all cannot be exempted from VAT payment. Therefore, the authorities have set a few specifications.
According to the specifications, the financial services which are not in return for discounts, rebate, and commission are exempted. Moreover, transfer of the ownership of security, allotment, or debt security is also exempted from VAT payment in the UAE.
2. Residential Buildings
One of the most important supplies in the UAE, which is exempted from VAT payment, is the residential buildings. The point to consider in this regard is that the buildings which are specifically being used for residential purposes are exempted from VAT. These can include the residence of students, service members, nursing homes, and rest houses.
The prime purpose of the buildings should be residence, and they should not have any other service for enjoying VAT exemption. Moreover, residential buildings like hotels, motels, hospitals, and bed and breakfast are not exempted from VAT as they provide numerous side services.
3. Bare Land
Another important supply in the UAE, which is exempted from VAT payment in the UAE, is the bare land. It does not just mean the land which is not in use and generating any profit but the land that is completely bare.
Most of the people think that the land which has a half-constructed, ore demolished buildings are included in bare land. However, it does not include it. Moreover, the land should not have any civil engineering work going on to be considered bare and exempted from VAT.
4. Local Transport Service
Lastly, the most important service which is exempted from VAT payment in the UAE is the local transport service. It includes the local passenger service, whether it is land, air, or water-bound. It means that the motor vehicles, buses, trains, airplanes, ferry boats, and tram are exempted from the payment of VAT in the region.
However, an important point to consider in this regard is that it is limited to local passenger services. Therefore, international flights will not be included in this service.
Not sure if your service or supply falls in the bracket?
If you are confused about the fact that your product or service falls in the VAT exemption bracket or not, you need to become sure about it. It is quite important because you can face penalties if you fail to comply with VAT due to any issue.
You can hire the services of the best VAT consultancy in Dubai and ensure to get detailed guidance about each and every step of VAT implications. By trusting the experts, you can get rid of your worries of facing any penalties. Moreover, you can also become confident about VAT exemptions.
So, do not rely on your limited knowledge and consult the experts for better guidance and progress in your business.