Generally, a taxable person’s net UAE VAT Payable is calculated By netting input VAT off. Against output VAT to arrive at the amount that must be paid.
The Profit margin scheme VAT is an exception. With the UAE VAT to be paid to the Federal Tax Authority. Based on the profit margin earned on the taxable supplies
rather than on the value of these supplies.
Profit Margin Scheme Conditions:
There are various conditions to fulfil, for the profit margin scheme to be used. (Art.43 of the VAT Law).
The used goods must be bought by a taxable person from:
- A person not registered for VAT UAE, Or
- A VAT- Registered trader who is operating the profit margin scheme.
As outlined in Art.29(2) of the regulations, the used goods must have been subject to tax before and must fall into one of the following categories :
- Second-hand goods (for example secondhand cars)
- Antiques, for these purposes, mean items over 50 years old
- Collector’s items, meaning stamps, coins and currency and other pieces of scientific, historical, or archaeological interest.
Under the profit margin scheme. No invoice or other document must be shown any VAT charged on the sale.
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