- Domestic Supplies: Most goods and services in the UAE are subject to a standard 5% VAT, while certain categories are zero-rated (e.g., exports, international transport, specific healthcare/education) or exempt (e.g., residential property after first sale, bare land, local passenger transport).
- Imports: A 5% VAT applies to imported goods and services, typically accounted for via the Reverse Charge Mechanism (RCM) for VAT-registered businesses, avoiding cash outflow. Non-registered entities pay VAT upfront at customs, which becomes a non-recoverable cost.
- Compliance Essentials: VAT on imports is calculated on the CIF value plus duties, with exemptions for personal effects, returned goods, and suspensions under customs arrangements. Proper documentation is critical for input tax recovery.
Source Dr. Murad Qabajeh
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