• Skip to content
  • Skip to navigation

Grant Thornton uses cookies to monitor the performance of this website and improve user experience

To find out more about cookies, what they are and how we use them, please see our privacy notice, which also provides information on how to delete cookies from your hard drive.

Global site
  • Global site
Grant Thorton Logo

Grant Thornton Logo Grant Thornton logo

  • About Us
  • Insights
  • Services
  • Meet Our People
  • Careers
  • News Centre
  • Contact Us
  • Advisory
  • Audit
  • Tax
Advisory Home
  • Transformation Advisory
  • M&A and Transactions Advisory
  • Forensics
  • Restructuring
  • Incorporation and Compliance
  • Business Process Outsourcing Services
Tax Home
  • VAT Compliance
  • VAT Advisory
  • Tax Dispute
  • Customs and International Trade
  • Excise Tax
  • International Tax and Tax Due Diligence
  • Transfer Pricing
  • FATCA/CRS Services
  • Secondment Services
  1. Grant Thornton UAE
  2. News Centre
  3. 2017
  4. VAT Alert - March 2017

VAT Alert - March 2017

21 Mar 2017
  • VAT Alert - March 2017

VAT: Public engagement workshops for practitioners and businesses.

The key highlights from the session are outlined below:

  • The VAT rate is confirmed at 5% as initially anticipated.
  • The mandatory registration threshold is likely to be in line with the GCC and will be AED 375,000. A voluntary registration option will be available for businesses making supplies of 50% or more of this figure.
  • Businesses that primarily make Zero-rated or Exempt supplies may not be liable to register for VAT purposes. Further details will be provided in the law and regulations.
  • The VAT law is expected be released by the summer of 2017. The detailed regulations will be issued later in the year. No draft law is expected.
  • Rules on Free Zones have yet to be clarified, although services in the Free zones are expected to be subject to VAT.
  • Good news for the Medical Services and Education sector where supplies will be Zero Rated. These were previously expected to be an Exempt Supply. Further clarity will be provided on what fees are zero rated and which of these will be Standard rated if these are strictly beyond Medical services and Education.
  • Special rules will apply for not-for-profit charities.
  • Within the Financial Services sector, it has been confirmed that Life Insurance is likely to be treated as an Exempt Supply for VAT purposes. For non- life supplies, these are likely to be Standard Rated. This will extend to ancillary services provided by brokers. The method of Input tax recovery for mixed suppliers providing both Exempt and Standard rated/Zero rated supplies will be provided. It has been confirmed that there will not be a Fixed Input Tax Recovery methodology as is available in Singapore and Malaysia.
  • The other industry which has had positive development is property development, where it was announced that the VAT on first sale of residential property is a Zero-rated supply and subsequent sales are likely to be an Exempt Supply. This is encouraging news for property developers where there was a concern that this may be an Exempt Supply and this would have been deemed as a ‘huge’ burden on one of Dubai’s leading business sectors. 
  • For rental of commercial and residential property, it was as expected confirmed that rental of commercial property would be subject to VAT at Standard Rates and for residential properties, these would be an Exempt Supply. It remains to be seen if there will be special rules for long stay Hotel and Services Residences. 
  • It has also been confirmed that there will not be a tourist VAT refund scheme operated in the UAE given the low rate of VAT already imposed within this sector.
  • Supplies of goods and Services to UAE Government are expected to be Standard Rated which will simplify processes for companies making supplies to the Government Departments and bodies.
  • The GCC VAT model will be similar to the model in the UAE, creating further synergy.


The VAT regime being introduced in the UAE with key sectors such as Health, Education and Property development receiving greater clarity is positive as it will aid as a boost for consumers with little likelihood of increased prices and fees.
We will continue to provide VAT updates as and when announced by the Ministry of Finance.

Should you wish to discuss the above in further detail please contact us

  • Grant Thornton on Youtube
  • LinkedIn icon
  • Follow us on Email
ABOUTclose
  • About us
  • Services
  • Careers
  • Insight
  • News centre
CONNECTclose
  • Meet our people
  • Contact us
  • Our Offices
LEGALclose
  • Privacy Policy
  • Disclaimer

© 2021 Grant Thornton UAE - All rights reserved. “Grant Thornton” refers to the brand under which the Grant Thornton member firms provide assurance, tax and advisory services to their clients and/or refers to one or more member firms, as the context requires. Grant Thornton UAE is a member firm of Grant Thornton International Ltd (GTIL). GTIL and the member firms are not a worldwide partnership. GTIL and each member firm is a separate legal entity. Services are delivered by the member firms. GTIL does not provide services to clients. GTIL and its member firms are not agents of, and do not obligate, one another and are not liable for one another’s acts or omissions.

    • EN