VAT was introduced with effect from 1 January 2018 in the United Arab Emirates (“UAE”). As a general consumption tax on the supply of goods and services, it applies to taxable supplies which take place within the territorial area of the UAE.
Businesses in the automotive sector in the UAE are principally engaged in the trading of cars. The cars in question are usually manufactured overseas and are sold in the UAE through a network of authorized distributors. This guide discusses the VAT implications of certain activities common within the automotive sector, particularly in respect of the sale of cars, the import and export of cars and warranty supplies.
This document contains guidance about the VAT treatment of supplies made by motor vehicle dealers in the UAE including but not limited to the supply of new cars, the supply of used/ second-hand cars, supplies under warranty and the export and import of cars.
The purpose of this document is to provide guidance on how VAT affects businesses which operate within the automotive sector.