Yes, in the United Arab Emirates the export of services is considered to be Zero Rated, which means that they are still subject to taxation but at a rate of 0%. Consequently, when determining your VAT registration threshold, these export services are included in the calculation.
Understanding the VAT registration threshold in the UAE is crucial for businesses operating in the country. While VAT applies to most goods and services, exempt supplies which are specific goods or services that are not subject to VAT are not included when calculating the VAT registration threshold.
Whether you're a sole trader or a business within a limited company, it's crucial to understand the factors that determine your VAT taxable turnover for both voluntary and mandatory VAT registration thresholds. These factors include the value of Standard Rated Taxable Supplies, Zero-Rated Supplies, Reverse Charge Items, and Imports subject to Import VAT. Exports, which are considered Zero Rated, also contribute to your VAT registration threshold. Remember, exempt supplies are not included in the calculation.
With the introduction of the Corporate Tax in the United Arab Emirates, you will need to understand if and how this will apply to you and/or your business.
It is important to note that Free Zone companies are not exempt from corporation tax in the UAE, but they may qualify for a 0% tax rate. This is an important distinction as all Free Zone companies be required to register for corporation tax with the Federal Tax Authority (FTA) and file returns at least annually.
The current threshold of 375,000 AED means that the taxable profits from £1 to of 374,999 AED are taxed at 0%. Any profits above 375,000 AED will be taxed at 9%.
Most jurisdictions now restrict or disallow client entertainment expenses, and the UAE is no exception to this. When you take a client out for dinner or drinks, or even paying for a joint golfing trip, this is client entertainment. You can indeed pay for this type of expense via the business, and it is still legitimate to do so.
Information provided on the site is merely guidance that may change in line with UAE law and regulations. Users must not consider this to be financial advice or their sole resource when making any financial decision. Theta7 is a trading name for THETA 7 Accounting & Bookkeeping L.L.C, an authorised & licensed accounting firm under the Ministry of Economy and the Federal Tax Authority of the United Arab Emirates.
