Posted on Nov 15, 2017
It is of utmost importance that the companies should aware that the products they are offering are falling under which categories of VAT.VAT is categories under certain categories so each and every category should be clearly understood so to avoid any misconception.
After categorizing the products and services accordingly, companies should treat them differently:-
Categories under VAT:
VAT is a Tax on the consumption of goods and services, levied at the point of supply and is not intended to be a tax on business. VAT is collected by registered suppliers down the supply chain and remitted to the government.
Standard rated supplies- A standard rated supply means that supply of goods and services, on which tax is levied at a rate of 5%, almost all supplies falls under this category unless specifically exempted or zero-rated as per the law. In UAE VAT is introduced at a very low rate of 5% which is expected to be a good start. If company is falling under this category they have to make sure certain things like:
Zero-rated supplies- Any zero-rated supply is a taxable supply but they are charged at a rate of 0%, when any transaction is zero-rated they can take input credit. If company is falling under this category they have to make sure certain things like:
Exempt supplies- These supplies are taxable but the rate is NIL, tax on such input supplies are charged as nil because of this business can’t claim input tax credit on these transactions. It should be make sure that VAT is not charged on exempt supplies.
All about VAT in UAE visit Unitedvat.com