FTA has introduced a new guide on Automotive Sector in accordance with Article 73 of the Executive Regulation and provides general guidance in respect of the business activities within the automotive sector in the UAE.
The guide is applicable for supplies made by motor vehicle dealers in the UAE who deals with:
- Supply of new cars.
- Supply of used/ second-hand cars.
- Leasing of cars.
- Warranty Supplies.
- Export and import of cars.
This is not a legally binding statement, but is intended to aid in understanding and applying the VAT.
Sale of Cars within the UAE
The sale of cars within the UAE is subjected to the standard rate of 5%. Sale of cars can be carried out by different types of agreements and in this guide the two most common types of agreements are discussed – Outright sales & Sales through hire purchase arrangements. The guide will explains the VAT implications in respect of the leasing of cars.
Key highlights of the Guide:
The guide contains clarifications and VAT implications upon the below mentioned scenarios:
- Clarification on time of supply of Car Sales and Leased Cars.
- Display prices for cars.
- VAT treatment on Trade – ins of being two separate supplies.
- Clarity on Profit Margin Scheme applicability.
- Clarity on Salik reimbursement.
- Various scenarios of Import and Export of Cars.
ACTIONS TO TAKE
We recommend all taxpayers who deals with the automotive sector to check out the newly released VAT guide and view the updated information in order to make informed decisions.
HOW MSATC CAN HELP?
- Filing the required information.
- Assist with timely and prompt advises through the process.
- Advice on better compliance in UAE VAT law.
