Sector Impact > Retail

Retail is a thriving sector in UAE and will contribute greatly to VAT collections. A standard rate of 5% will be applied to all retail sales.

  • Imports
    • Imports from outside the GCC attract VAT under the Reverse Charge Mechanism and then claim the Input Tax Credit.
    • The Reverse Charge Mechanism places the burden of declaring the VAT on the importer if the import is from outside the GCC. When goods are imported from another GCC country, the importer would pay VAT on the RCM basis. However in case, the exporter from another GCC country has claimed input tax credit on the initial import, this would have to be reversed when it is exported to another GCC country. The detailed law is awaited on this.
  • Local Sales
    • All local sales will be subject to the Standard rate of 5% unless the goods are under Exempt or Zero rated categories. Retail such as Grocery stores that may sell staple food items that may not attract Tax, but most non-staple items will be taxed.
    • Retail must ensure that either they prepare separate invoices for each category or include the tax rate for each item separately.
    • Each invoice must then declare the sum of the tax charged in each category to enable the buyer to calculate the tax credit available.

Sector VAT News Update

UAE retail sector must assess impact of VAT on their operating models

Duty Free Retail Impact Study

Sector impact analysis is provisional based on the GCC Draft and may change when the country issues the relevant VAT laws.