Taxable VAT is the amount of tax a business has to pay on goods and services they sell. A taxable amount in UAE is approximately 5% of the original price of the products. A business collects this amount of 5% from the people on behalf of the government.
There are certain goods and products that fall under the taxable supply category in UAE. This taxable amount is not changed whether the product is sold at a discounted price or not. The 5% tax will be added to the products at the discounted price if there is any offer made by the business. A business must register on time if its taxable supplies reach or increase AED 375,000 within a year.
Keep scrolling down the article to get familiar with the list of products and services that are taxable in the UAE.
Top 6 Taxable VAT Services in the UAE
Many people and businesses mix the taxable supplies and goods with exempted and zero-rated supplies and end up facing VAT penalties. It is very important for a business to know which products and services are VAT exempted and for which products and services you need to pay the tax. These services and products will have varying tax rates depending upon who is using it and for what purpose it is used.
Below is the list of services and products that are taxable, and a business must pay VAT on them.
All the educational facilities provided to students and people of any age are exempt from value-added tax. But there are certain conditions and elements for which a person has to pay a certain amount of tax. Educational services provided by private higher education institutions have to pay VAT, and such institutions must register themselves. Such educational institutions acquire the services of the best VAT consultancy in Dubai to register and get the best advice.
Following are some of the educational elements on which you have to pay a 5% tax.
- School uniforms
- Laptops, computers, projectors, and tablets
Real estate sector
In the UAE, residential properties are exempted from the tax, and the landlords and owners do not have to pay any tax on residential properties. But there are certain conditions and situations under which paying a 5% tax becomes necessary, and failing to pay it on time results in penalties.
Following is the list of conditions for the real estate sector under which paying VAT becomes obligatory.
- Selling or renting of non-residential properties
- Properties like hotels, motels, inns, etc.
Insurance service sector
According to the UAE law, most insurance facilities and services are tax exempted; for example, some life insurance policies are exempted from tax for UAE residents. On the other hand, similar insurance policies will not be exempted from the tax; rather, they are fixed to zero-rated for people outside UAE.
Following are some of the insurance policies and services for which a value-added tax of 5% is applied.
- The insurance and reinsurance on motors, vehicles, and property
- Life insurance and reinsurance
Financial service sector
The financial service sector is one of the most popular sectors in the UAE, not only in the UAE but worldwide. The tax policies for this sector are a bit complex as a huge number of transactions are involved in this sector. There will be different tax amounts charged, depending upon the type of transaction and service acquired. Following are some of the financial services or bank services on which a 5% VAT is due, which is refundable in some cases.
- Account opening
- Subscription fee
- Money transfers
- Card related services
Oil and gas
Oil and gas are the most used essentials for people. These two elements can be used in various ways and in various forms. Depending upon how they are used, there are different rules for the tax implied on these products. Crude oil and natural gas are free of VAT, and the use of oil and gas other than these uses are inclusive of tax.
Following are the oil and gas services for which value-added tax is applicable.
- Natural gas and non-crude oil supplied locally
- Petrol and other products of oil and gas at pump stations
Like the previous sectors, healthcare services and products are also exempted or zero-rated, but the following are the conditions under which value-added tax is applied to healthcare services.
- Services and products that are not a part of medical treatment, i.e., surgeries
- Medical essentials and tools that are not listed in the official document.
Knowing the areas for which tax is applied or not is very important for any business because it helps your business avoid penalties. You can hire VAT consultancy to get expert advice and get your business registered.
Get the help of a VAT Consultant!
Understanding the value-added tax complexities is not the cup of tea for everyone. One must look for an expert to deal with such matters and help businesses to get expert advice. So, make sure you consult an expert to deal with these matters and help you avoid penalties.
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