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Profit Margin Scheme under VAT in UAE

The Profit Margin Scheme is an important scheme for calculation of VAT in UAE. This scheme is applicable to certain specified goods and there are certain conditions to be fulfilled to be able to supply goods under the Profit Margin Scheme. The profit margin scheme allows a taxable person to calculate VAT on eligible supplies…

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VAT Administrative Exceptions You Can Apply In the UAE

The Federal Tax Authority (FTA) in the UAE released a recent guide providing the procedures and scope for certain exceptions from VAT procedures. A VAT Administrative Exception is a mechanism which provides registrants with concessions / exceptions allowed by the Federal Decree-Law No. 8 of 2017 on Value Added Tax (“Law”) or Cabinet Decision No…

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VAT treatment of compensation-type payments

The FTA through Public Clarification VATP001 has laid down the principles that the businesses can use to determine if the VAT should be due on compensation payments. In order for an obligation to charge VAT to arise, there must be a supply of goods or services. If any payment does not relate to a supply…

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Reimbursement and Disbursement of Expenses in UAE VAT, Whether Taxable or Not

The Federal Tax Authority (FTA) released a public clarification, VATP013, that sets certain principles to analyze certain expenses which amount to Reimbursement or Disbursement. The said public clarification discusses the applicability of VAT on reimbursement and disbursement of expenses charged by a taxable person on another person. Reimbursement and disbursement: It is important to understand…

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Taxability criteria for Director Services

Employees who perform services for their employer are not considered to be making a taxable supply. However, taxable persons who provide independent director’s services to other legal entities would be considered to be making a taxable supply of services. The Director’s Service fee otherwise called as Management Fee is taxable under the UAE VAT Law….

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