It has been around three years since the implementation of value-added tax in the United Arab Emirates, but it is still difficult and hard to understand the concept for many business organizations and traders. One of the things that make its understanding complicated is the division of VAT into the following categories:
- Standard VAT
- VAT exemption
- Zero-rated VAT
Standard VAT is applicable at the rate of 5%, while VAT exemption highlights that there is no tax payable. The most complicated category is zero-rated VAT. Zero-rated means that the businesses do not need to pay any tax, but how is it different from VAT exemption? The answer is that in the case of zero-rated VAT, you do not need to pay tax, but you can claim input tax deduction acquired during dealings.
Keep scrolling down this article to explore a brief guide about zero-rated value-added tax services in the UAE.
Top 8 Zero Rated VAT Services in the United Arab Emirates
VAT in UAE seems difficult and complicated to the business organizations due to which they are always nervous if they are committing some mistake or not. In addition to it, the process of input tax deduction adds to the complexity of the matter. The government has shared the details of industries or services with zero-rated taxes to make the situation a bit easier.
Here are the top zero-rated services in the United Arab Emirates for which you do not need to pay any tax but claim an input tax deduction.
- International Transport
The first category that falls in the range of zero-rated value-added tax in the United Arab Emirates is international transports. It further includes two categories that are:
- Air Fare
- Air Transport of Passengers
Air fare means that the passenger using the service do not have to pay VAT. On the other hand, air transport of passengers means that the air transport business owners or authorities also do not need to pay tax. Still, some exceptions can take place due to which business authorities hire the service of the best VAT consultancy in Dubai and get professional advice and support in critical times.
- Air, Sea and Land Transport of Passengers
The second category that has a zero-rated tax in the United Arab Emirates is the air, sea, and land transport of the passengers. In other words, any type of passenger transport service can pay zero-rated tax. Moreover, it is not just applicable to passengers, but the air, sea, and land transport of goods and services also falls in the same category.
- Precious Metal Investment
There is a rising trend of investing in precious metals, due to which their import and supply have become quite common too. According to the executive regulation decree-law, the import, supply, or investment in precious metals is zero-rated VAT category in the UAE. So, the interested parties must consider the taxation requirements to make the most of their investments.
- Direct or Indirect Exports
One of the most important categories of zero-rated taxation according to executive regulation decree-law is the direct and indirect exports. However, it is applicable to the exports outside of the UAE and to the states that are in the Gulf region but have not implemented value-added tax.
- Oil and Gas
The production and supply of natural gas and crude oil fall in the category of zero-rated valued added tax in the UAE. So, the authorities associated with the field have to be careful about input tax deductions to make the most out of their dealings.
- Residential Building Sale
Another important category that falls in the range of zero-rated taxation in the United Arab Emirates is the sale of residential buildings. The zero rates are applicable for sale and lease during the first three years of completion. However, the buildings converted from non-residential to residential also have a zero-rated tax for the first supply.
- Supply of Charitable Building
Apart from the sale and supply of the residential buildings, the same of the charitable buildings also falls in the category of zero rates value-added tax. However, it is applicable to the first supply of charitable buildings.
- Educational Services
Lastly, the educational services also have zero-rated tax in the UAE. However, there are a few exceptions, and you may have to face penalties if you do not adhere to them. So, hire the best VAT consultancy to take account of all the exceptions and fulfill your responsibility to avoid getting penalties or a poor reputation.
Get in touch with professionals to explore more details!
Now that you have got a brief detail of zero-rated taxation categories, you must have identified if you are included in it or not. In both cases, you cannot ignore the further process. Contact the experts now to get exclusive details and advice and ensure to take care of your tax-related responsibilities.
