What goods and services are exempt from VAT in the UAE?
Exempt supplies include certain financial services, residential property rentals (except the first sale within three years), bare land, and local passenger transport. Unlike zero-rated supplies, businesses cannot reclaim input VAT on exempt supplies.
Certain goods and services are exempt from VAT in the UAE, meaning no VAT is charged, but input VAT cannot be recovered.
Exempt Supplies Include
- Certain financial services (loans, credit, insurance)
- Residential property rentals (except first sale within 3 years)
- Bare land transactions
- Local passenger transport services
- Certain investment services
Impact on Businesses
- No VAT charged on exempt supplies
- Cannot reclaim input VAT related to exempt supplies
- May need to apportion input VAT if making both exempt and taxable supplies
- Generally increases costs for businesses making exempt supplies
Important Considerations
- Exemptions are specifically defined in UAE VAT law
- Different from zero-rated supplies
- Professional advice recommended for complex situations
- Regular updates to exemption lists may occur
