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VAT EXEMPT SUPPLY

What are Exempt Supplies in UAE VAT?

Exempt supplies in the UAE are defined as goods or services provided for consideration while conducting business, where no tax is applicable and no Input Tax can be recovered. Put simply, there are specific goods or services listed in the executive regulations of the UAE that are exempt from VAT. This implies that VAT is not imposed on the supply of these goods or services. Businesses dealing with these exempted goods or services are not entitled to reclaim the input tax paid on their purchases.

For instance, if you paid 5% VAT on raw materials and the finished products made from these materials are exempt, you cannot claim back the 5% Input VAT paid on your purchases; it must be considered as part of the product's cost.

Exempted goods and services list in UAE

Generally, VAT exemptions in the UAE are provided for

• Specific financial services
• Residential properties
• Bare land supply
• Local passenger transport

 Nevertheless, for a supply to be considered exempt from VAT, it must meet the specific conditions outlined in the UAE VAT Act and Executive Regulations.