What is zero tax? Zero tax is one of the most prominent terms that have been asked by many questions in the recent period, as the zero tax is equal to zero and is refundable on inputs, as it is imposed on a number of goods and products, which we will talk about in detail in the following lines on the website. EnglishShop.
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What is zero tax?
A zero tax is defined as a tax imposed by legal text, equal to zero, and refundable on its inputs, as it is imposed on a limited number of goods and services.
While it is possible to differentiate the term zero tax And its counterpart tax exempt, the latter is the group of goods and services that have been legally exempted from paying taxes on them.
It is also not permissible to recover the zero tax on its inputs except by amending the text of this law.
What goods and services are subject to zero tax?
We will mention in the following lines the goods and services that are subject to zero tax:
- There are some goods that are currently subject to VAT, including precious metals, when imported or exported for investment purposes.
- After precious metals, the tax is imposed on the export of oil and natural gas.
- This applies whether the export is done directly or indirectly, as it is exported to countries that apply the tax in the first place.
- This tax is also imposed on residential investment buildings, which are buildings that were built primarily for the purpose of investment and not housing, provided that they are sold within a period not exceeding 3 years from the date of their construction.
- On this basis, the law also imposes a tax on all non-residential buildings that have been converted into residential buildings by selling or renting them.
- Besides these buildings, there are buildings called Charitable Buildings, which were initially constructed for charitable purposes.
- It is also subject to tax provided that the first supply is made by selling or renting it.
- On the other hand, zero tax is imposed on the export of air, sea and land transportation.
- They are the means used for the purpose of transporting passengers and goods for the purpose of exporting and importing various goods and services.
- In the UAE also, zero tax is imposed on education services, whether exported or imported.
- From kindergarten to other educational levels in addition to health care services.
Can customs duties be deducted for value-added payments on some goods?
The Tax Union reported that VAT is worth adding to the customs duties paid by the importer.
So it cannot be deducted, provided that it is calculated on the basis of the total value of the goods, which includes customs duties.
What is tax exemption from zero-sum tax?
As for tax exemption in the United Arab Emirates, for example, it is a procedure that is applied to a very limited scope, especially to suppliers of supplies that are essentially exempt from taxes.
Accordingly, suppliers cannot recover tax on expenditures on their purchases of tax-exempt supplies, and in the case of certain tax-exempt financial services, if the bank also provides tax-exempt services, it will again not be able to recover the tax incurred.
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What is the difference between exempt tax and zero tax?
In the following lines, we will discuss the difference between exempt tax and zero tax:
Zero tax
It is the tax imposed on certain goods and services through a legal text in the tax law, and decided by the Ministry of Finance. So it can be increased at any time without the need to amend the law because it is legal. The text states that its value is zero, so the tax on its inputs can be recovered.
Exempt tax
It is a group of goods and services that have received a tax exemption according to a specific legal text. The tax on any of its inputs cannot be recovered except by amending the legal text in the Value Added Tax Law. Also, exempt sales are sales that are not subject to sales tax, examples include coffee, sugar, rice, and olive oil.
