Must prices shown to customers include VAT?

Article (25) Page 9 of 26 26 من9 صفحة Tax Rate 1. Tax shall be applied at the standard rate of 5% of the value of the Supply or the value of Imports, unless this Agreement provides for an exemption or the zero-rate on such supplies. 2. Without prejudice to the obligations provided for under this Agreement and the Local Laws, published prices in the local market for Goods and Services must include VAT.

2.4. Price display Cars are often displayed by motor vehicle traders in their showrooms. For sales of cars to the public, a motor trader vehicle must display, advertise, publish or quote VATinclusive prices. This is required so that the customer knows upfront the price that is payable for the car. For example, if the car is priced at AED 100,000 and the VAT applicable on the sale is AED 5,000, a motor vehicle trader must advertise the price as AED 105,000 with a stipulation that the price includes VAT. There are two exceptions to the above rule where the advertised price is not required to be inclusive of VAT: (a) Where the supply of car is for export; and (b) Where the customer is registered for VAT. If any of the exceptions apply and a motor vehicle trader advertises the price as exclusive of VAT, it must clearly specify that the price is exclusive of VAT. 2.5. Sale of cars to foreign governments, international organisations, diplomatic bodies and missions Sale of cars to foreign governments, international organisations, diplomatic bodies and missions, or an official thereof, are also subject to VAT at 5%. The foreign governments, international organisations, diplomatic bodies, missions or an official thereof may, however, seek a refund of such VAT incurred under the special VAT refund 5 scheme prescribed in the VAT legislation. 5 Article 75(4) of the Decree-Law read with Article 69 of the Executive Regulation. Automotive Sector | VAT Guide | VATGAM1 8

How do I calculate the VAT included in the amounts I receive from the client? The VAT included in any transaction is calculated by dividing the price by 21. Example: Calculation mechanism: Price including VAT = AED 220 VAT included in price = AED 220 ÷ 21 = AED 10.48 What are your obligations after registration? After registering with the FTA, a taxable person is referred to as ‘Registrant’. Advertise prices inclusive of VATA registrant must ensure that prices of goods and services advertised to consumers include VAT, whether in food menus, catalogues, or price tags. 1 Issue Tax Invoices for each sale of taxable goods or services A registrant must issue valid tax invoices for each taxable supply of goods or services. The issuance of proper tax invoices is one of the tax compliance requirements that must be adhered to in the course of making taxable supplies. Make sure that all the tax invoices you issue meet the necessary criteria, as below. The Tax Invoice shall include the following: - The words “Tax Invoice” clearly displayed on the invoice. - Description of the goods or services supplied. - The name, address and Tax Registration Number (TRN) of - Unit price, the quantity or volume of the supply, the the supplier. - The name, address and TRN (if registered for VAT) of the recipient. sequential tax invoice number or a unique invoice -A number that enables the identification of the tax invoice and its number in any sequence of invoices. - Date of issuance. - The date of supply if it is different from the date of issuance. payable VAT rate and payable amount (in AED) for each good or service. - Any o¬ffered discount rates. - Total amount payable in AED. - The amount of the tax payable in AED and the applicable exchange rate. - If the recipient is required to account for VAT, the invoice must include a reference to this, and a reference to the relevant provision of the Law.

Article (26) Value of Supply of Goods and Services 1. The fair market value is the amount at which Goods or Services can be dealt in in an open market between two independent parties under competitive conditions determined by each Member State. 2. The value of a Supply shall be the value of Consideration less the Tax and includes the value of the non-cash portion of the Consideration determined according to the fair market value. 3. The value of the Supply shall include all the expenses imposed by the Taxable Supplier on the Customer, the fees due as a result of the Supply and all the Taxes including Excise Tax, but excluding VAT. 4. In the case of a Deemed Supply and transportation of Goods from one Member State to another, the value of the Supply shall be the purchase value or cost. If the purchase value or cost cannot be determined, then the fair market value shall apply. 5. Each Member State shall determine the conditions and provisions for adjusting the value of the Supply between Related Persons. 6. The value of the Supply is reduced by the following amounts: a) discounts in prices and deductions granted to the Customer; b) the value of subsidies granted by the Member State to the Supplier; c) amounts paid by the Taxable Supplier in the name of and to the account of the Customer. In this case, the Taxable Supplier may not deduct Tax paid on these expenses. 7. If any of the components of the value of the Supply is expressed in a foreign currency, it shall be converted into the local currency based on the official exchange rate applied in the Member State on the Tax Due date. 8. Each Member State may determine the value of the Supply in certain cases not referred to in this Article.