VAT-free offers in the UAE
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FTA on VAT-free offers in the UAE
VAT-free promotions under the FTA: The United Arab Emirates' Federal Tax Authority has issued a public clarification on VAT-free special offers (VATP020). This defines the VAT status of promotional products in which the seller absorbs the VAT.
Except where the supply qualifies for zero-rating, VAT-registered enterprises should not advertise taxable goods or services as VAT-free or offer such goods or services without accounting for 5% VAT.
VAT Deregistration in Dubai
VAT Deregistration in Sharjah
VAT Deregistration in Ajman
VAT Deregistration in Abu Dhabi
VAT Deregistration in Fujairah
Possibility of levying VAT
If the seller is a taxable person, he or she is required to charge 5% VAT on all products and services sold in the UAE, unless the goods or services qualify for zero-rating or exemption.
Any promotional campaign that states that the supply of promotional products is "VAT-free" obligates the seller to charge VAT on these supplies since VAT is due on taxable supplies and the seller has no authority over whether or not VAT should be applied on a supply. The seller, on the other hand, may make a commercial judgment to offer a discount equal to the VAT amount.
Discounts
Sellers may decide to absorb VAT by offering "VAT-on-us" deals to entice purchasers. In certain cases, the seller is considered to be providing a discount equal to the amount of VAT imposed on the promotional products or services.
Prices include VAT
The VAT must be included in the stated price of taxable supplies. If the products or services will be exported, or if the customer is VAT registered, the taxable person may declare VAT exclusive prices.
Even if a business explicitly offers "VAT-free" prices as part of a promotion label, the price charged to the client is regarded to include VAT.
Regardless of whether the campaign is advertised as "VAT-free," the amount paid by the consumer for the promotional goodwill comprise the VAT exclusive consideration.
Invoices for taxes
Article 59 of the Executive Regulations states that tax invoices for taxable promotional items or services must meet all of the conditions. As a result, the seller must provide the tax rate, tax amount, and gross amount payable in AED on the tax invoice for each taxable good or service provided.
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