The Federal Tax Authority (FTA) has been established in UAE to commence VAT effective from 1st January 2018.
The introduction of VAT and Excise taxes will help the UAE diversify sources of revenue so that government departments can continue to deliver excellent public services and ensure a high quality of life for coming generations. This is also in line with a key pillar of the UAE's Vision 2021 -The Sustainability of Infrastructure.
Value-Added Tax or VAT is a tax on the consumption or use of goods and services levied at the point of sale. This is applied to all consumers/customers who do business/transact in the UAE (regardless of place of residence).
It is generally the end consumers that bear the VAT cost while registered businesses collect and account for the tax, in a way acting as a tax collector on behalf of the Federal Tax Authority. We have registered with the FTA in order to comply with the new regulations and therefore will apply the 5% tax to any services we provide that are taxable.
The following are some of the services that will include the 5% VAT charge as of 1st January 2018:
- Our property management fees
- Agency fees for leasing and sales services
- All completed commercial property revenues
- Building service charges
- Electricity and water/utility accounts
- Maintenance/cleaning/ pest control services
- Transfer office fees (currently AED 4000 fee and including tax of 5% will increase to AED 4200)
Please note there are no taxes, including capital gains, applied to any residential property income/revenues. Financial services such as mortgages and loans will be exempt from VAT.
Kindly review the link for more details about the Tax implementation and process https://www.tax.gov.ae/index.aspx and https://www.mof.gov.ae/En/budget/Pages/VATQuestions.aspx.
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