The value-added tax (VAT), which came into effect from January 1, 2018, in UAE, is a consumption based tax which will be applicable at each stage of the ‘supply chain’. That means, any UAE business making a taxable supply of goods and services will have to pay VAT on that supply. The UAE VAT is based on the same concept as followed by the other countries which use this tax system, however, the standard rate of VAT is fixed at 5% for all taxable supplies in UAE.
As per the VAT rules and regulations, some basic services (and goods) like food, public transport, and some healthcare services are exempt from the VAT, while some other services will be taxed at zero percent. You can find out more about VAT-exempt and non-exempt supplies on http://www.thevatuae.com. The VAT shall be levied at each stage of the supply chain, but there is a concept of input credit through which businesses can claim their taxes back from the government, and the ultimate VAT cost is borne by the end consumers. … More The Introduction of VAT in the UAE