VAT – Exempted supplies

VAT – EXEMPT SUPPLIES

LOCAL PASSENGER TRANSPORT

Exempt Supply:

A supply of Goods or Services for Consideration while conducting Business in the State, where no Tax is due and no Input Tax may be recovered except according to the provisions of the Decree-Law.

Exempt supplies are not included in the VAT registration threshold calculation to ascertain VAT registration limit.

The following supplies shall be exempt from Tax under UAE VAT law:

  1. Financial services (that are specified in the Executive Regulation of this Decree-Law.)

  2. Supply of residential buildings through sale or lease, other than that which is zero-rated.

  3. Supply of bare land.

  4. Supply of local passenger transport.

Here we are going to discuss in detail, about Local passenger transport service.

Exemption of Local Passenger Transport  Services :

The supply of local passenger transport Services in a qualifying means of transport by land, water or air from a place in the State to another place in the State shall be exempt.

Qualifying means of transport means:

  1. A motor vehicle, including a taxi, bus, railway train, tram, mono-rail or similar means of transport, designed or adapted for transport of passengers.

  2. A ferry boat, abra or other similar vessel designed or adapted for transport of passengers.

  3. A helicopter or airplane designed or adapted for transport of passengers and approved for transport of passengers in accordance with Federal Law No. (20) of 1991 on Civil Aviation.

Exceptions:

1.      The Service of transporting of passengers from a place in the State to another place in the State shall not be considered a local passenger transport Service where the transport is by aircraft and constitutes “international carriage” as defined in the Warsaw International Convention for the Unification of Certain Rules Relating to International Carriage by Air 1929.

2.      The transport of passengers shall not constitute a supply of local passenger transport Services where it is undertaken in the context of a pleasure trip involving sightseeing, or the enjoyment of catering services, or other forms of pleasure or entertainment.

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