The United Arab Emirates has announced that Value Added Tax (VAT) will come into effect in the country from 1 January 2018. VAT will be imposed on most of the domestic supplies of goods and services with a few exemptions and zero-ratings.
In line with the introduction of VAT, all of Noor Bank rates & fees will be updated to be VAT inclusive, wherever VAT is applicable.
Please refer to the below Frequently Asked Questions (FAQ) about VAT implementation in the UAE:
What is Tax?
Tax is the means by which governments raise revenue to pay for public services. Government revenues from taxation are generally used to pay for things such public hospitals, schools and universities, defence and other important aspects of daily life.
There are two types of taxes:
- A direct tax is collected by government from the person on whom it is imposed (e.g., income tax, corporate tax).
- An indirect tax is collected for government by an intermediary (e.g. a retail store) from the person that ultimately pays the tax (e.g., VAT, Sales Tax).
When will VAT go into effect?
VAT will be implemented in the UAE, effective 1 January 2018 at the standard rate of 5%.
Who can or will be able to register for VAT?
A business must register for VAT if their taxable supplies and imports exceed the mandatory registration threshold of AED 375,000.
Furthermore, a business may choose to register for VAT voluntarily if their supplies and imports are less than the mandatory registration threshold, but exceed the voluntary registration threshold of AED 187,500.
Similarly, a business may register voluntarily if their expenses exceed the voluntary registration threshold. This latter opportunity to register voluntarily is designed to enable start-up businesses with no turnover to register for VAT.
What sectors will be exempt?
The following categories of supplies will be exempt from VAT:
- The supply of some financial services (clarified in VAT legislation);
- Residential properties;
- Bare land; and
- Local passenger transport
What Noor Bank needs from customers?
VAT registration is necessary under UAE VAT Law as advised by Federal Tax Authority. Noor Bank needs VAT registration number from its underlying customers for the purposes of issuing valid tax invoice.
For more information about this regulation, please visit the Ministry of Finance (MoF) on the following page: