There are two kinds of VAT rates in the UAE: the zero rate of zero percent and the regular rate of five percent. We can locate VAT-free supplies, and VAT is not taken into account for exempted and zero-rated supplies, but there is a significant difference between the two. Get help from VAT registration services if your firm wants external assistance in filing for VAT. In this article, there is a lot to learn about VAT fundamentals.

A Brief Explanation of VAT in UAE

VAT is an indirect tax levied on the sale of most services and goods. At every point in the supply chain, VAT is collected. Final consumers are liable to pay VAT, and businesses do their part by accounting for it. VAT registration is not required for all companies in the UAE. If your taxable resources and imported goods exceed AED 375,000, you must apply for VAT registration in the UAE. VAT registration services have an efficient team who will be able to perform all VAT operations for your business successfully.

If your taxable goods and import tariffs exceed AED 187,500, you can sign up to pay VAT voluntarily. The UAE FTA defines taxable goods for VAT purposes as "a supply of services or goods that can be charged at a rate of zero or five percent. Imports are also included in this calculation if the supply of those products or services will be taxable and made in the UAE.' In layman's terms, businesses get VAT from consumers and pay to the federal government. VAT paid to suppliers by a VAT-registered business can be regained from the government.

The VAT registration procedure in the UAE is relatively simple if you get expert advice long in advance. The 1st step is to open an account on the website of the FTA. Go to eservices.tax.gov.ae and click 'Sign Up.' Fill in the necessary information, such as your email id, password, and so on. After completing this step, you will get a confirmation to your mail address with instructions on how to proceed. You can sign in to your account and start the VAT enrollment process once your email has been verified.

Learn What VAT Registration Services Do to Help You With VAT Filing

After logging into the e-services portal, by tapping 'Register for VAT,' you will get started. Several UAE documents are needed to finish your VAT application.

• Personal information
• Contact details
• Banking information
• Business details- those with whom you have business connections

VAT registration services will provide you with your tax number once you successfully register for VAT (TRN). While filing your VAT return, you must include this information. After providing all the required information by selecting 'Submit,' you will get approval. There aren't any VAT registration fees associated with this service in the UAE.

An Overview of Three Types of VAT Rendered by VAT Registration Services

VAT can be divided into three main categories based on the type of supplies in UAE according to VAT registration services. They are:

VAT at a Standard Rate 

The supply and import of most services and goods in the UAE are subject to a 5% VAT rate. According to the law, if a firm is registered for VAT and charges VAT at the usual rate, the company may be able to retrieve the VAT levied by its supplier.

VAT at Zero Rate 

The VAT on zero-rated supplies is not accounted for (because the applied rate is 0%). The zero rates will be applicable to the supply of the mentioned services and goods, according to Article (45) of Federal Decree No. 8 of 2017. These supplies are treated as "taxable supplies." Thus, the person providing the supply is entitled to reclaim the VAT paid on their own business.

• Indirect or direct export of services and goods to countries other than the Implementing States.
• International passenger and cargo transportation that begins or wraps up in the state or moves through its borders, including transportation-related services.
• Provision of all transportation modes for the transit of goods and passengers.
• Supply of services and goods related to the supply of the modes mentioned above of transportation designed for their execution, maintenance, repair, or conversion.
• The initial supply of housing developments within three years of completion.
• Provision of aircraft designated for sea or air assistance and rescue.
• The import or supply of valuable metals for investment purposes.
• The provision of precautionary and primary healthcare services, as well as related services and products.
• The supply of buildings designed exclusively to be used for charities and those converted from non-residential to residential.
• The supply of academic services and related Services and Goods for preschools, nurseries, and higher education establishments funded or owned by local or Federal government.
• Speaking with an accredited tax agent who can guide you for a deeper understanding of business circumstances is essential.

VAT-free Goods and Services 

This category's products and services are exempt from VAT. It implies they do not have to pay VAT at the sale or purchase. Furthermore, businesses that make combined supplies with differing VAT liability will be required to allocate VAT accumulated on general costs. The following goods are exempt from VAT, according to Article (46) of Federal Decree No. 8 of 2017.

• Financial services which are not performed for a fee, commission, rebate, or other similar kinds of consideration, like life insurance and reinsurance.
• Undeveloped land area.
• Residential facilities other than zero-rated residential buildings.
• Local public transportation.

Also Read : An Ultimate Guide to VAT Tax in UAE

The Takeaway

To summarise, rather than discussing "types of VAT," supplies can be classified into two categories: The taxable supplies that are five percent standard rated or zero percent rated, and the exempted supplies that aren't taxable in the UAE. If you want to register for VAT, you should usually regard the VAT registration threshold as follows: Goods taxable at the standard five percent rate, zero-rate supplies, and imports of services and goods. Remember that you will not include exempt supplies. We hope this article provides a clear overview of the UAE's VAT regime. Finally, we'd like to reiterate that if you're not an expert, don't try to handle your VAT by yourself. It's a complex topic with several constantly changing laws. It necessitates a profound understanding and a tiny bit of passion. Contact Fortius Consulting Services, one of the popular business consulting services in UAE, if you want professional help handling your VAT filing operations.