VAT Free Sale Promotions in UAE
Retailers often create new sales promotions in a competitive market. They announce “VAT free sales” or say “VAT on us” to attract customers. Sellers want to get more buyers with these offers. It is the seller’s duty to follow VAT laws and charge the correct tax on every sale. Businesses must check their promotions to be sure they meet tax rules.
Are “VAT Free Sale Promotions” Allowed in UAE?
Many people ask, “Are VAT free sales legal in the UAE?” The Federal Tax Authority (FTA) gives clear rules. FTA says, if a product is taxable, sellers must charge VAT on that sale. A seller can’t decide to skip VAT. It is a legal duty to collect VAT and issue a proper tax invoice.
But, sellers can offer discounts that match the VAT amount. This makes the final price lower for the customer, but VAT must still be included in the sale. It is a way to attract buyers but still follow the rules.
Key Points for Sellers
- Sellers must charge VAT if the product is taxable.
- Discounts can be given to cover the VAT amount.
- Tax invoices must show VAT amounts.
What Is the Impact of VAT on Sales Promotions?
When sellers say “VAT on us” or “VAT free,” the customer still pays the same total price. The price shown to the customer is seen as a VAT-inclusive price. The VAT part is included in that amount. The seller pays the VAT amount to FTA from what the customer paid.
For example, if you buy an item for AED 945 marked “VAT free,” it means the price already has VAT included. The seller reports AED 900 as the value of supply and AED 45 as VAT in their tax return.
Impact on Sellers
- The price shown as “VAT free” includes VAT by default.
- Sellers must report and pay the VAT part to FTA.
Do Sellers Need to Charge VAT on “VAT on Us” Sales?
Yes, the seller must charge VAT even if they say “VAT on us.” The law makes it clear that sellers have to apply VAT to all taxable goods and services. FTA tells business owners to avoid any sales offers that mislead buyers about VAT. Clarity in transactions helps avoid mistakes and heavy fines.
- Sellers must follow VAT laws even when promoting offers.
- Every transaction must be transparent for buyers and FTA.
- Avoiding mistakes helps prevent penalties.
How Do VAT Inclusive Prices Work in Promotions?
If a shop shows a price for a taxable item as “VAT free,” the law says it is VAT inclusive. The seller must work out the value of supply and VAT. Here’s an example:
- The customer sees the price tag as AED 945 (VAT free).
- The seller must treat AED 945 as a VAT-inclusive amount.
- The supply value is AED 900, VAT is AED 45.
- In the VAT return, the seller reports AED 900 as supply and AED 45 as tax.
Sellers must give a tax invoice that shows the supply value and VAT amount separately. The invoice needs to follow the official rules, especially Article 59 of the VAT regulation.
Points About Invoices
- Tax invoices must list supply value and VAT amount.
- The “VAT free” part is shown as a discount.
- The real VAT is displayed on the invoice as the law says.
How Mubarak Al Ketbi (MAK) Auditing Helps You
When VAT started in the UAE, many business owners had questions about new rules. Transactions can be complex, so it’s smart to check with tax experts. Mubarak Al Ketbi (MAK) Auditing has skilled accountants and consultants who guide clients through UAE VAT. They help you with correct tax treatment, compliance, and avoid mistakes that lead to penalties.
Our Key Services
- Professional advice on UAE VAT
- Detailed help with tax questions for your business
- Support for tax returns and compliance
- Custom consulting for different business types
- Clear answers to complex VAT rules
Mubarak Al Ketbi (MAK) Auditing has served many clients in the UAE. Their team provides value by helping with accounting, tax, and business consulting.
How Mubarak Al Ketbi (MAK) Auditing Can Help
If you feel like you’re lost at sea in VAT regulations, Mubarak Al Ketbi (MAK) Auditing is ready to steer your ship! Their experts give you clear advice, sort your tax questions, and make compliance smooth as silk. Don’t miss the boat—get the right help today!
- For more information, visit our office:
- Saraya Avenue Building – Office M-06, Block/A, Al Garhoud – Dubai – United Arab Emirates
- Or contact/WhatsApp on this number: +971 50 276 2132
