Jul 11
UAE e-invoicing 2026 guide for B2B and B2G invoices, July pilot readiness, VAT controls, accounting software checks and 2027 rollout plannin
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UAE e-invoicing 2026 guide for B2B and B2G invoices, July pilot readiness, VAT controls, accounting software checks and 2027 rollout plannin
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Profit Margin Scheme under UAE VAT – A Guide for Resellers | RVG
Charging VAT on second-hand goods, antiques, collector’s items, or Article 53 goods at full selling price can create tax cascading, where VAT is effectively applied multiple times. To address this, the Federal Tax Authority (FTA) introduced the Profit Margin Scheme, a special optional VAT mechanism that allows resellers to pay VAT only on their profit margin, rather than the full selling price.
Who Can Apply?
The scheme applies to resellers dealing with:
Second-hand goods (e.g., used cars, electronics, furniture)
Antiques (goods older than 50 years)
Collector’s items (stamps, coins, rare objects)
Article 53 goods, where input VAT recovery is blocked
Key Highlights
VAT is calculated on the profit margin: VAT=ProfitMargin÷21VAT = Profit Margin ÷ 21VAT=ProfitMargin÷21
Losses or break-even sales are VAT-free
Optional application for each eligible supply
Requires proper invoicing: invoice must state “VAT charged under the Profit Margin Scheme” without showing VAT separately
Prescribed record-keeping must be maintained
Must be reported correctly in the VAT Return (VAT201)
Why It Matters
The Profit Margin Scheme aligns VAT with actual economic value addition, prevents cascading, and reduces unnecessary tax for resellers. It provides a fair, practical, and compliant method for calculating VAT on eligible goods.
🔗 Read the full blog for detailed guidance, examples, and compliance tips: https://rvguae.com/vat/profit-margin-scheme-under-uae-vat/
Value Added Tax (VAT) in UAE
Value Added Tax (VAT) was introduced in the UAE on January 1, 2018, at a standard rate of 5%. VAT is an indirect tax that is applied to the majority of goods and services purchased and consumed within the UAE. At Shuraa Tax, we offer expert VAT consultation services in Dubai to help businesses understand UAE VAT laws, we assist you from VAT registration to compliance, refunds, and more.
If you are looking for comprehensive tax management along with VAT accounting and advisory services, then Shuraa Tax Accounting & Auditing have to be the ultimate solution to all your problems. Speak to our agents and get quick assistance with your financial dealings and this way you'll be able to increase your company's productivity and overall efficiency.
A UAE VAT number is a unique identifier that is issued to businesses that are registered for VAT in the United Arab Emirates. The VAT…
