VAT FAQ:
1. What is VAT?
• Value Added Tax (VAT) is a tax on supply of goods and services and is being introduced by the UAE Government
2. When will VAT be charged and what will be the rate?
• VAT will be charged starting 1 January 2018 at a standard rate of 5%
3. What are the services in AADC that are subject to VAT?
• Consumption of power, water and most billable services are subject to the standard rate of VAT
4. Are municipality fees subject to VAT?
• Municipality fees are not subject to VAT
5. Are security deposits subject to VAT?
• Security deposits are not subject to VAT
6. Is it compulsory to pay VAT?
• Exceptions to VAT are only by law, and these are published by the Federal Tax Authority. There is a possibility for business owners to claim back their VAT payments, provided they have registered for VAT and meet the requirements. For further details, please visit www.tax.gov.ae
7. Is my bill similar to previous bill?
• Yes, your bill is similar to your previous bills, however it has been enhanced with the mandatory requirements of a tax invoice
8. Will VAT be charged before or after the subsidy?
• VAT is applicable to the net amount charged i.e. after the subsidy
9. Where can I obtain more information on VAT?
• More information on VAT can be obtained from Federal Tax Authority
10. What will be the impact of VAT on January 2018 bills, if part of the bill pertains to consumption during December 2017?
• Consumption will be pro-rated between December 2017 and January 2018 (based on the number of days in the billing period) and VAT will be applied on consumption pertaining to January 2018. For other services, VAT will be applied if the services are completed in January 2018.
11. As a commercial entity, do I have to share my VAT registration number with AADC?
• In order for your business to claim input tax, we have to display your VAT registration number on the tax invoice. Please share your VAT registration number with us when you receive it.