‘VAT-free offers’ misleading, says UAE tax authority

‘VAT-free offers’ misleading, says UAE tax authority

The UAE's Federal Tax Authority (FTA) has clarified that "VAT-free special offers" are misleading and contrary to legislation because goods and services are not actually supplied free of value-added tax (VAT).Numerous retailers are offering "VAT-free special offers" as promotions to entice prospective buyers to purchase goods or services within a promotional period. But instead of "VAT-free special offers", tax experts say that such campaigns should be referred to as "VAT on us".It said the seller may, however, make a commercial decision to offer a discount equivalent to the amount of VAT. As a consequence, VAT is always payable on taxable supplies and the seller is not entitled to choose whether or not VAT should be imposed on a supply."Sellers may take a commercial decision to absorb VAT in order to