Zero-Rated and Exempt Supplies in VAT Form 201
In the UAE VAT Return form 201, the details of zero-rated supplies and exempt supplies are required to be furnished in box no 4 and 5 under ‘VAT on sales and all other outputs’ section. In this article, let us discuss about zero-rated and exempt supplies in Tax return (VAT form 201).
Zero-Rated supplies in VAT Form 201
Zero-rated supplies in UAE VAT refers to the taxable supply on which VAT is charged at zero rate. Generally, all exports of goods and services in UAE will be considered as zero-rated supplies. Apart from exports, education services, healthcare services, a residential building for human occupation etc. are also considered under zero-rated in UAE. To know more, please read Zero-Rated Supplies in UAE VAT.
In the VAT form 201, the taxpayer engaged in supply of zero-rated goods and services should furnish the details in box no 4 as shown below.
Only the net value (after deducting adjustment towards credit note) of zero-rated supplies should be captured in this box since VAT on these supplies are calculated at zero-rate, meaning there is no output VAT liability. The following are the type of supplies which should be included in the box no 4:
- Exports of goods and services outside the UAE
- Local supplies of certain educational services and related goods and services
- Local supplies of certain healthcare services (e.g. preventive and basic healthcare services and related goods and services)
- Supplies or imports of investment precious metals
- Supplies of crude oil and natural gas
Exempt supplies in VAT Form 201
Under VAT in UAE, there are certain exempted goods or services notified in the executive regulations, on which VAT is not levied. This means, on supplying these goods or services, VAT is not charged. The following are the goods and services exempted from the VAT:
- Notified Financial Services
- Residential Buildings
- Bare Land
- Local Passenger Transport Services
In order to consider the above supplies as exempted from VAT, the specific conditions mentioned in the UAE VAT Act and Executive Regulations need to be fulfilled. To know more the exempted supplies and applicable conditions, please read VAT Exempt Supplies in UAE.
All exempt supplies should be reported in box no 5 of Tax Return form as shown below:
As shown above, only the net value (after deducting adjustment towards credit note) of the exempt supplies are required to be declared in this Box, since there is no VAT on the supply. The following are the types of supplies which should be included in the box no 5:
- Local supplies of certain financial services
- Supplies of residential buildings through sale or lease, other than the ones subject to the zero rate of VAT
- Supplies of bare land
- Supplies of local passenger transport
Key points in filing VAT form 201 with zero-rated and exempt supplies
- Though VAT is not charged on both zero-rated and exempt supplies, the VAT implications are different
- The businesses need to clearly identify the zero-rated and exempt supplies and accordingly report it in the relevant box
- Only the net value need to be declared in box no 4 and 5. If there are any credit notes, you need to adjust and report only the net value