Types of VAT in the UAE

What are the different VAT rates in the UAE?

There are five different tax rates that can be applied to taxable supplies:

• VAT on sales of 5%. As a VAT-registered supplier, you must charge a 5% VAT on all goods and services provided within the UAE. The output tax, i.e. the collected VAT from your customer will automatically be included in your Wafeq VAT report.
• VAT on purchases of 5%. As a VAT-registered customer, you will be charged a 5% VAT on all goods and services you purchase within the UAE. The input tax, i.e. the paid VAT amount to your suppliers will automatically be included in your Wafeq VAT report.
• Reverse Charge of 5%. As a VAT-registered business in the UAE, you will pay a 5% reverse charge tax rate on imported goods and services. For accounting purposes, Wafeq will simultaneously generate a debit and a credit on VAT for this reverse charge, so the net VAT is 0.
• Zero-rate sales of 0%. As a VAT-registered supplier, you must charge a 0% tax rate on all direct and indirect exports of goods and services, international transportation services, educational services, and healthcare services. While the VAT amount charged is zero, you must report the total value of zero-rated supplies on your VAT return. Wafeq does that automatically for you.
• Exempt of 0%. Certain goods such as residential buildings, bare land, and services such as financial services and local passenger transport are exempt from VAT charges. However, you still need to report exempt supplies in your VAT return. Wafeq does that automatically for you.