Taxation Essay Sample

Article (2): Supply of Goods

It involves the transfer and ownership of goods. For example, where goods forming part of the assets of a business are transferred or disposed of by or under the directions of the person carrying on the business so as no longer to form part of those assets, where or not for a consideration, the transfer or disposal is a supply of goods by the person.

Article (3): Supply of Services

An example of an act that can be treated as supply of services is temporary transfer or permitting the use or enjoyment of any intellectual property right or renting of immovable property.

Article (4): Supply of More Than One Component

A good example is when the final consumer makes a claim on the warranty of the product, the importer or distributor makes two supplies which are a supply of goods and services.

Article (5): Exceptions related to Deemed Supply

It may include where a business was registered for VAT but later decides to deregister, and by that time held some goods that had no input tax recovered on their purchase then the supply will not be regarded as a Deemed Supply.

Title Three: Registration

Article (6): Application for Registration

Article (7): Mandatory Registration

A business that has reached the threshold turnover is expected to register for VAT. For example, if the total value of its taxable supplies and imports within the UAE exceeds the mandatory registration threshold of AED 375,000.

Article (8): Voluntary Registration

This for example applies to a business whose expenses exceed the voluntary registration threshold of AED 187,500

Article (9): Related Parties

Persons that are included in a tax group are for example those with eligible criteria such as where each of the persons involved in conducting the business in a partnership control the other.

Article (10): Registration as a Tax Group

Two or more companies deciding to join together and form a VAT tax group in order to save cost of multiple VAT registrations but one member of the group takes control of the registration but with specific qualities, for example be a legal person and already registered for VAT.

Article (11): Amendments to a Tax Group

This happens when all groups/parties involved have provided an evidence of the group structure showing the controlling or shareholding structure as well as a board resolution from each member companies in order to amend the tax registration.

Article (12): Effect of registration as a Tax Group

Two companies in the same group registration tax cannot for example involve in suppling goods and services to each other as the transaction is not taxable.

Article (13): Aggregation of Related Parties

A business selling goods and services to its main parent partner at a certain cost might not be able to sell the same products under the same terms to another customer.

Article (14): Tax Deregistration

For example, a business may wish to deregister but only after it stopping to conduct some of the supply activities it usually conducted and have no intention of conducting them in the next one-year period.

Article (15): Deregistration of a Tax Group Registration or Amendment Thereof

This may occur for example where the companies involved in a tax group no longer meet the requirements to be considered a group and if the same companies are no longer associated on financial terms.

Article (16): Exception from registration

Businesses are determined through their threshold and an example of a situation where a business may wish to apply for registration exception is when its taxable turnover goes over the threshold temporarily.

Article (17): Registration when the Decree-Law Comes into Force

A company must register according to the executive regulation set by the Decree-Law which are procedures, controls and conditions for Tax Registration and Tax deregistration.

Title Four: Rules Relating to Supplies

Article (19): Due Tax at Date of Supply

Article (20): Place of Supply of Goods Delivered within the State

When Company A is shipping goods to Customer B thus the supply involving a movement of goods, the place of supply will be determined by the location of the goods which is B at the time of final delivery attracting a levy.

Article (21): Place of Supply of Services Related to Real Estate

Real Estate fall under immovable property, and therefore if located in one state, then the place of supply shall be the location of the recipient.

Article (22): Place of Supply of Certain Transport Services

Company X which is a good transportation company is hired by another different electronic company to transport radios; the place of supply will be the location of the electronic company where it is registered.

Article (23): Telecommunication and electronic services

Under this law, telecommunications and electronic services for example the TV will be taxed in the country where the customer belongs regardless of whether the customer is a business or consumer.

Article (24): Evidence for Certain Supplies between the Implementing States

The customer department of the country receiving exported goods confirms the type and quantity of those goods with the exported documents from the exporting company.

Article (25): Market Value

A company's value of supply will depend on whether there is a consideration. A consideration which includes money or in kind and if there is no consideration and it is a deemed supply the value of the supply is the open market value.

Article (27): Price Excluding Tax

If a company makes a taxable supply, the supply becomes the output of this company in question with the tax changed becoming the output tax. The same will happen if the same company purchases taxable supplies, the supply becomes the input while tax payed the input tax.

Article (28): Discounts, Subsidies and Vouchers

A company's transactions will be subject to VAT for any discounts offered by the company as it is not exempted from tax, and the customer will be liable to pay the applicable taxes on the discount amount. This is the reason a discount shall be the amount by which the consideration is reduced.

Title Five: Profit Margin Scheme

Article (29): Accounting for Tax on the Margin

In this situation a business accounts for the profits earned through operational activities revealing the financial ability of the business before tax related effects. The tax profit margin will therefore show the percentage sales after the deduction of the sale of goods.

Title Six: Supplies to the Zero Rate

Article (30): Zero-rating the export of goods

The supplying vendor company will charge output tax at the standard rate on the supply of the movable goods to the qualifying purchaser when conducting business in export countries.

Article (31): Zero-rating the Export of Services

For example, a registered person supplying taxable services to an exporter will be required to charge and collect VAT from the exporter and if the services shall be zero-rated.

Article (32): Zero-rating Exported Telecommunications Services

A company supplying telecommunications services as export will be required under the VAT Act to issue a VAT invoice to their clients for the zero-rated services.

Article (33): Zero-rating international transportation services for Passengers and Goods

For example, Air transfer of passengers in the UAE incurs zero rates if it is considered an international carriage as per the article.

Article (35): Zero-rating Goods and Services Supplied in Connection with Means of Transport

It includes the supply of transport services in relation to the importation of goods where the value of the services is included in the taxable amount.

Article (36): Zero-rating of precious metals

Only precious metals which meet the prescribed criteria as specified under item 4, GST of Exempt Supply will qualify as Investment Precious Metals

Article (37): Residential buildings

Residential buildings are under immovable property and therefore the owner of land or the structure built will have to pay property tax with no exemption if qualifies to be a building that the person occupies.

Article (38): Zero-rating of Buildings specifically designed to be used by Charities

Any construction or building that was intended for use solely for a relevant charitable purpose or a relevant residential purpose is zero rated. Its construction and first sale or long lease will be zero rated if it meets all of the standard conditions.

Article (39): Zero-rating Converted Residential Building

A Person may intend to convert a non-residential building forming a dwelling residential building where by the sale of the converted property can be zero rated and VAT on conversion costs recovered.

Article (40): Zero-rating Education Services

Educational services and related goods and services supplied shall be zero rated if the education institution qualifies as a higher educational institution owned or funded by federal or local government, and preschools.

Article (41): Zero-rating Healthcare Services

For example, a healthcare service will be exempted from VAT with many countries including the application of a zero-rate, no VAT is charged on the provision of the services and any VAT charged in relation to these supplies can be reclaimed if licensed by the ministry of health.

Title Seven: Exempt Supplies

Article (42): Tax Treatment of Financial Services

A company may be exempted from tax with no deduction of related input tax. Therefore, the income from such supplies may be used in the calculation to establish recovery of VAT on expenditure.

Article (43): Exemption of Residential Buildings

For example, if a property developer acquires a property for the principle purpose of making a taxable supply, and then subsequently rents the property out, a change of use adjustment will be required.

Article (44): Exemption of Bare Land

A land owner cannot claim a land to be non-notifiable if the land has not been used predominately for the time the land was being owned.

Article (45): Exemption of Local Passenger Transport Services

Any company aiming to supply local passenger transport shall be exempted from tax under the Decree-Law outlines.

Title Eight: Accounting for Tax on Certain Supplies

Article (48): Calculation of Tax under the reverse Charge Mechanism on import of Concerned Goods or Concerned Services

In the UAE VAT Reverse Charge Mechanism, a taxable person will pay the due tax for goods entering a state on import of concerned Goods pursuant to the mechanism specified bhy the Executive regulation of Decree-Law.

Article (49): Payments for Goods Transferred to another Implementing States

When a company is transporting goods to another state, the final destination of the goods becomes an implementing state and the taxable person is required to pay the due tax on import.

Article (50): Imports by Unregistered Persons

A person not registered for Tax in the UAE has a plan of importing goods, in this case, he/she must have an agent to clear the goods from the customs and be liable for payment of Tax.

Title Nine: Designated Zones

Article (51): Designated zones

Any designated zone that is annexed with the Cabinet Decision meet the requirement of the Cabinet Decision and shall be considered as Designated Zones for the implementation of VAT Law under the defined regulation of this article.

Title Ten: Calculation of Due Tax

Article (52): Input Tax Recovery in Respect of Exempt Supplies

A business/person can supply zero-rated goods and charge no tax to the customers and therefore the output tax will also be zero but the person will be allowed to recover any input tax that is to be charged by the supplier.

Article (53): Non-recoverable Input Tax

A company/person cannot be able to recover the tax if they decide to remit the full amount of the money they have collected regardless...