Vat

Bottled Water WILL Be Subject to 5% VAT On January 1

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Value Added Tax will be introduced to the UAE and Saudi Arabia at 7am on January 1.

While parts of some sectors will be exempt including healthcare, education, transportation and real estate; goods and services such as food, DEWA, Etisalat and Du will be subject to 5% VAT.

And goods such as bottled water, fruit and vegetables will also be taxed, in a move which is expected to generate an estimated AED12billion of revenue for the UAE in the first year alone.

The following will be subject to 5% tax from January 1

Education:

  • Education provided by private higher educational institutions, and related goods and services
  • School uniforms
  • Stationery
  • Electronic equipment (tablets, laptops, etc.) 
  • Renting of school grounds for events 
  • After school activities for extra fees
  • School trips for recreation or not within curriculum (

Healthcare:

  • Other healthcare services that are not for treatment and are not preventive (e.g. elective, cosmetic, etc)
  • Medicines and medical equipment not listed in Cabinet Decision 
  • Other medical supplies 

Oil and gas:

  • Other oil and gas products including petrol at the pump

Real estate:

  • Sale and rent of commercial buildings (not residential buildings) 
  • Hotels, motels and serviced accommodation 
  • Land (not bare land)
  • UAE citizen building own home 

Financial services:

  • Products with an explicit fee, commission, rebate, discount or similar

Investment gold, silver and platinum, jewellery: 

  • <99 per cent pure
  • Jewellery 

Insurance and Reinsurance

  • Insurance and reinsurance (including health, motor, property, etc) 

Food and beverages:

  • Food and beverages

Telecommunications and electronic services:

  • Wired and wireless telecommunications and electronic services 

Not for Profit organisations

  • Business activities undertaken by the above organisations (VAT rate dependent on good/service ignoring provider)

Free zones:

  • Supplies of services between businesses in designated zones (VAT rate dependent on service ignoring location)
  • Supplies of goods and services in non-designated zones (VAT rate dependent on good/service ignoring location)

Other:

  • Any supplies of services or goods not mentioned above (includes any items sold in the UAE or service provided)
  • Second hand goods (e.g. used cars sold by retailers), antiques and collectors’ items (five per cent of the profit margin)

You can read the full Federal Decree-Law No. (13) n the Establishment of the Federal Tax Authority here

Read: This Infographic Will Tell You Exactly What You Need To Know About VAT In The UAE

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