Standard Rated, Zero Rated, and Exempt Supplies

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Value Added Tax is levied on supplies of goods and services depending on their nature of consumption. There are certain commodities whose supplies are treated as standard rated, zero-rated or exempted.

Differentiation between Standard Rated Supplies, Zero Rated Supplies and Exempt Supplies are as follows-

Standard Rated supplies Zero-rated supplies Exempt supplies

Meaning

 

Standard Rated includes all the taxable supplies with the application of VAT in each emirate.

 

 

Zero-rated supplies include supplies with VAT tax rated at zero per cent.

 

Exempt supplies include sales that are exempted from VAT tax.

 

Input Claim Credit

As Standard Rated supplies are taxable in nature, input tax can be recovered.

 

As zero-rated supplies are taxable in nature, input tax can be recovered.

 

 

As exempt supplies are not taxable, there is no input tax recovery.

 

Prevailing VAT Rate

VAT Rate – 5%

VAT Rate – 0% Exempted
Exceptions for Input tax

Recovery of input tax in areas of entertainment, salaries, gifts, donations, etc.

Some Common Examples

 

 

 

 Goods and services for business purposes, purchased from VAT-registered suppliers.

 

 

 

  • Supply or import of precious metals.
  • Export of goods and services to non- GCC states.
  • Supply of crude oil and natural gas.

 

 

  • Local passenger Transport supply
  • Certain specified financial services.
  • Supply of residential buildings through sale or lease, or those which are zero-rated.

 

 

Please feel free to reach out to us at contact@choicepeers.com for further information.

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