VAT was implemented in UAE on 1 January 2018 in pursuance with the UNIFIED VAT AGREEMENT (UVAT), signed by all six GCC countries.
VAT is levied on the supply of goods and services. This tax is levied on END CONSUMER and is NOT A TAX ON BUSINESS. However, the businesses act as a collection agent on behalf of Federal Tax Authority (FTA). The suppliers of taxable goods and services charge the VAT on their supply and pay the same to the government. Details of the charge, collection and payment process are given in the coming paragraphs.
“Health care services” includes both services and goods related to such health care.
These may include the furnishing of:
Yes, it is applicable to the health care services. But these services are taxable at a rate of Zero percent (0%).
VAT is charged at each step of the supply chain. End consumers generally bear the VAT cost while the registered businesses shall collect VAT on behalf of the tax authority. The VAT charged by a supplier shall be adjustable input tax against the tax payable on sales i.e. output tax.
A hospital purchases bandages from the factory, the factory shall charge VAT at the time of sale to the hospital and when the same bandage is used by the hospital for a treatment (a taxable service) then the hospital will charge the VAT from a patient who is end consumer.
Supply at the rate of zero percent means when the registered supplier of taxable goods and services will charge VAT at zero percent; for example;
Services Charges: AED =100,000/- only
VAT @ 0% AED=0/- only
Total AED =100,000/- only
There is different treatment of tax for the exempt supplies and the supplies at the rate of zero percent. The exempt supplies have no implication of tax law whatsoever, however, the supplies at zero percent can receive the benefits of input taxes.
Every business receives some inputs and supplies some outputs. Therefore, it will have to pay tax on its purchases and then collect tax on its sales. In case of taxable supplies, the business will be required to pay the difference between the tax collected on sales and tax paid on purchases; for example
Purchases (Inputs) AED 100,000
Input Tax AED 5,000
Sales (Outputs) AED 150,000
Output Tax AED 7,500
Payment to Federal Tax Authority
Output Tax AED 7,500
Less: Input Tax AED 5,000
Tax payable AED 2,500
When the business TAXABLE AT THE RATE OF ZERO PERCENT, there will be no tax on the supplies and all the tax paid on purchases will be REFUNDABLE for the business.
But when the business is EXEMPT, there will be no application of VAT law and all the taxes paid on the purchases will become part of the cost and there will be no adjustment and NO REFUND.
A basic rule is that when services are completed but where the transaction is continuous over a period of several month or year i.e. different date of providing service, issuing invoice or receipt of payment then earlier of the following
Stay Healthy Hospital give treatment to Abu Al Hassan for his disease. Abu al Hassan treatment completed on 25 July 2017 but issues invoice on 15 August 2017. In this case, the date of supply will be 25th July as per basic tax point and vat will be due on the same date.
But where payment is received earlier i.e. 10 August 2017 then it will be considered as tax point and tax is due on the same date.
VAT Return is a statement in a prescribed format file electronically on the Federal Tax Authority (FTA) portal. And it contained detail of all kinds of sales purchases made by the registered taxpayer.
Every registered person file return.
Small/Medium size entities/business file return on monthly basis.
Large Size Business Entities File return on quarterly basis.
The general provision regarding filling;
Yes, there are some additional records to be maintained but more or less it is same as to accounting Records.
Following should be maintained with accuracy whether it is in electronic format or manually
On Which Expenses VAT Can be Recovered Through Input Credit?
Read more about VAT Implications on Residential Buildings