Page 27 - Premier Brains Global -Doing Business in UAE (Low Res)

DOING BUSINESS in UAE

Out of scope supplies In case of services rendered within a
There can be out of scope supplies like high designated zone rules are slightly different.
As the place of supply of services is within
sea sales. Out-of-scope supplies are the
supplies that are outside the purview of the UAE even though it is in a Designated Zone,
VAT in the UAE. Unlike the Standard-rated, the Federal Tax Authority states that the
transaction is liable for the 5% standard VAT
zero-rated and exempt supplies, you don’t
need to declare out-of-scope supplies Charges.
in the general VAT returns submitted in
each tax period. Moreover, companies that Record keeping and
make only out-of-scope supplies need not
documentation
register for UAE VAT. However, they can carry
Valid tax invoices must be issued for all
out voluntary VAT registration in the UAE if
taxable supplies, showing a range of
their taxable supplies cross the voluntary
mandatory information. For Vat deductions
registration threshold.
taken, the purchaser needs to keep copy
of the VAT invoice issued by the supplier.
Concept of Designated Zones Deductions of VAT are not permitted for non-
A designated zone is a place which is even business expenses and certain purchases
though within UAE but is considered to be are specifically excluded from recovery, such
outside the UAE territory for tax purposes. as entertainment, catering, and purchase or
A designated zone is a specific fenced expenditure on motor cars for private use.
geographic area with security measures
and Customs controls in place to monitor Taxpayers are expected to retain the
entry and exit of individuals and movement relevant VAT, accounting, and other records
of goods to and from the area. Designated to support the data entered on the VAT
zones are areas identified by the UAE return for a period no less than five years
Cabinet as eligible for special treatment from the end of the relevant tax period, and
under the UAE VAT law. Not all Free Zones are 15 years for activities relating to real estate.
categorized as Designated Zones, and there The FTA may increase these time limits by a
are certain criteria to be met for designated further four years in certain circumstances.
free zones too for exemption from VAT. It is also advisable to verify the tax number
of supplier from the online portal of FTA
VAT is not levied on goods which are before paying the VAT invoice to ensure
imported directly to a designated zone and such supplier holds an active VAT number.
is only applied on these goods only when
they leave designated zones.

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