The UAE introduced Value Added Tax (VAT), a broad-based indirect tax levied on the consumption of goods, from January 1, 2018 at a standard rate of 5 per cent.

Following is the most general list of questions:

1. Do property owners have to register for VAT? What if the property is registered in joint names?

If property is owned and self-used, registration is not required.

If it is rented but if it is residential property more than 3 years old, registration is not required. However, if it is residential property newly constructed or a commercial property (irrespective of new or old), the registration is required, if the rental exceeds Dh375,000.

However, if property is not for rental or business and sold in individual capacity, registration is not required irrespective of selling price.

2. Is VAT applicable on renewal of lease agreement of residential property?

No, VAT is not applicable on residential property.

3. In contracting business we get payment delays up to 6 months and often the payment settlement is lesser value than the invoiced value. Can we prepare the “Performa Invoice” or a “payment application” at initial stage without actually paying VAT?

Yes. If it is a valuation application under consecutive invoices or periodic payments. However once it is certified, you shall raise tax invoice. If final settlement is lesser than tax invoice, you shall issue tax credit note.

4. We are a Dubai registered company buying and selling in different countries and ship goods directly between those countries. Is VAT applicable in my business?

If goods are not entering UAE, the transactions would be out of scope of UAE VAT laws.

5. Our company is a newly registered free zone entity, do we have to register for VAT?

No, unless you cross the threshold limit of Dh375,000 in next 30 days.

6. Does VAT apply on transport of goods within the country over lands?

Yes.

7. Do auto-maintenance workshops need to register for VAT?

Registration is based on taxable supplies and not the nature of activity. If the workshop’s turnover exceeds threshold limit, it must register.

8. My DMCC company has only one activity which is brokerage between non-GCC suppliers, and non-GCC importers. Since both suppliers and importers are out of GCC is VAT applicable?

Applicable if brokerage service is performed in UAE.

9. VAT applicable on sale and trading in used auto tires and spare parts?

Registration is based on taxable supplies and not the nature of activity. If the workshop’s turnover exceeds threshold limit, it must register.

10. Will prepaid phone recharge cards have VAT added to the price?

Yes, It will have as the same is telecommunication service.

11. Our rent notice renewal amount is the same as for next year amount 100,000, would  it become 105,000?

No, if you are asking about a residential property.

12. Will VAT applied to the revenues of my newly opened company?

No, VAT is a consumption tax and applicable only to the supplies you make.

13. I am renewing the car insurance in December and as of now no VAT is applied on my premium, can the insurance company charge me the VAT in January for the premium I paid in December 2017? 

No. VAT is applicable only from January 1, 2018

14. How about salary; is there VAT or any other tax on salaries?

No, VAT is a consumption tax, and salary is out of scope for VAT.

15. Do I have to pay VAT on university fees?

Yes, if the university is privately owned and/or funded.

16. Do we need to pay VAT on existing car loans?

No, loans are in the VAT exempt category.

17. Will VAT apply on rents also and parking in the building?

No, VAT is not applicable on residential rents. If the parking fee is charged separately, you have to pay VAT.

18. Will metro, tram and bus fares be higher for each trip with VAT?

No, as it falls under the definition of passenger transport and is exempt.

19. Are my post-paid phone bills going to be affected by VAT?

Yes, It will have as the same is telecommunication service.

20. Will the purchase of travel packages online have VAT charges? 

Yes, as it falls under the definition of service.

21. Would resident health care and pharmacy costs based on co-payment be higher with VAT? 

No, as long as they are basic health care services. This also depends on the health service provider. 

22. Will my ATM transactions be affected by VAT?

No, it is simply a transaction in money and thus out of scope.

23. Will getting a driver’s licence (including classes and tests) cost more once VAT comes into force?

Yes, it is a service and so taxable

24. Will I be charged VAT when renting office space for my SME?

Yes

25. Will VAT be added to my shipping costs if I send out a personal package or cargo?

No, but this is subject to change and custom duties may be subject to VAT.

26. Will all my tech purchases and services be subject to tax?

Yes

27. Will going to the cinema cost more once VAT is rolled out?

Yes

28. Would salon and spa services be affected by VAT?

Yes

29. Will selling my property in the UAE be affected by VAT?

No, if the property is residential.

30. Will hotel stays have VAT added to the final bill?

            Yes

31. Will going to theme parks and family entertainment venues in the UAE such as Dubai Safari Park, Dubai Parks and Resorts, Ferrari World, Aquaventure, Wild Wadi, cost more with VAT?

Yes

32. Will buying or selling used cars come under the purview of VAT?

Yes

33. I am getting married in Dubai; will wedding venues charge VAT for the rent of the space in 2018?

Yes

34. Is a gym membership going to be more expensive from January 1?

Yes

35. Will government services including ID services, passport services, visa (visit, tourist and residence) services cost higher after VAT?

Possibly. We are waiting for confirmation as to which government entities will be exempt.

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