Frequently Asked Questions Regarding Value Added Tax Implementation in the United Arab Emirates

Frequently Asked Questions Regarding Value Added Tax Implementation in the United Arab Emirates

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Frequently Asked Questions Regarding Value Added Tax Implementation in the United Arab Emirates
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1) Is VAT Applicable to Services Provided by Mercer?

Yes, Mercer provides consultancy services that are within the scope of VAT law.

2) a) My Business Is Based in UAE. How Will VAT Affect My Organisation?     

All organisations with revenue above AED375,000 in the past 12 months, or the next 30 days, will be required to register for VAT prior to 1 January 2018.

You will be required to provide Mercer with your VAT registration number.

VAT-registered businesses must pay VAT of 5% on all taxable purchases. The Dubai International Financial Centre (DIFC) and other free-trade zones are included within the VAT framework.

b) My Business Is Based in the Gulf Cooperation Countries (GCC). How Will VAT Affect My Organisation?
You will be required to account for VAT on a reverse-charge basis.

In this instance, Mercer UAE invoices will not carry a VAT charge.

c) My Business Is Based Outside the GCC. How Will VAT Affect My Organisation?

In this instance, Mercer UAE invoices will not carry a VAT charge. Local laws in your country of operation will apply.

d) Are Government Organisations within Scope of the VAT Framework?

Yes, all local government organisations, including ministries, will have to pay VAT on all taxable purchases.

3) To Whom Will I Pay VAT?

For Mercer services, you will pay the VAT-inclusive amount to us, and we will pass the collected VAT on to the UAE tax authorities.

4) a) If Mercer Completed a Project Before 1 January 2018, but Has Not Invoiced for It, Will VAT Apply?

No, VAT will not apply to work performed and completed prior to 1 January 2018.

We intend to invoice for work completed in 2017 prior to the implementation of VAT.

b) If Mercer Started a Project Before 1 January 2018, but Does Not Complete the Project or Certain Milestones by that Date, How Will the VAT Be Calculated?

VAT will only apply to milestones completed and work delivered in 2018.

For work performed and milestones achieved in 2017, VAT will not apply, providing this can be separately identified in the client agreement and evidenced for audit purposes.

We will reach out to you to agree on an invoicing strategy. and we will endeavour to invoice you for the project milestones that we have delivered prior to 1 January 2018.