FTA(Federal Tax Authority) is all set with the rules and regulations to implement VAT in January 2018 without any deferment. Most of them expected the inclusion of VAT to be delayed, but with the proper strategies and planning, FTA is prepared to introduce VAT to the UAE citizens.

As per the latest update by the FTA authorities, around 90% of the organizations are registered for VAT which comprises 70% of SMEs. The very few companies which did not register for VAT are yet to face a big-time loss if they ignore the necessity of  VAT. The companies which did not register for VAT are not supposed to impose a tax on their products rather pay it from their pockets.

The FTA has released a document which has all the details regarding the VAT. Amongst which the Article 45 and Article 46 are to be given a detailed look at it describes the sectors which are included and excluded from the tax payment.

Also read: VAT affects on the education sector in Dubai

Article 45:

It has the sectors which come under the Zero-rated category. The zero-rated category comprises of the organizations under this section would pay 0% tax and still avail the benefits of the taxpayers.

  • Goods and services exported out of GCC
  • International transport of travelers and Goods which imports or exports in the State or passes through its region, including Transport-related Services.
  • Materials which are particularly meant for charitable sectors are imported under zero-rated category
  • Educational institutions like pre-primary schools, primary and high schools and higher education universities(owned or sponsored by local or federal government)
  • Basic health care amenities  
  • First stock supplied to the residential buildings which take maximum three years for completion
  • First stock provided to convert commercial buildings to residential flats 

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Article 46:

Article 46 lists the sectors which are exempted from the VAT.

  • Local public transport like buses, metro, trams etc
  • Vacant properties
  • Supply for the residential buildings other than those which comes under Article 45 i.e. zero-rated category

Apart from Article 45 and Article 46, there are altogether 85 articles which give a complete outlook on the VAT with the rules, regulations, provisions, violations, and ends with the effective date which January 1, 2018. All the companies which don’t come under Article 45 or Article 46 should register on or before December 3, 2017, or they would be penalized with an additional fine for the registration.

Tax agents:

FTA has started providing job opportunities to the Bachelor or Masters degree holders in law, accounting, and tax, for the role of Tax agents. The tax agents will be acting as the mediators between FTA and the taxpaying citizens for providing and helping the public on the queries related to the VAT. So, VAT has already started its good impact in providing employment to the UAE residents. Interested individuals can register it from here: www.tax.gov.ae  

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Meanwhile, FTA is simultaneously working on conducting workshops for the public to give them a clear picture and let them be aware of all the advantages they get once VAT comes into the effect.

Meet the author
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Nikitha is a Senior Analyst at MyMoneySouq.com. She has been writing about personal finance, credit cards, mortgage, and other personal finance products in the UAE. Her work on Mortgage loans has been featured by the GulfNews and other popular Financial Blogs in the UAE.

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