If your annual sales exceed 375,000 AED, VAT is charged at a rate of 5% of the selling price–KAARTAL
Do you need to pay VAT on second hand items?
The implementation of VAT in the UAE has raised concerns among the public due to its potential impact on the cost of living during these challenging economic times. Fortunately, the buying and selling of pre-owned items on Kaartal is still generally considered a VAT-free activity. Since Kaartal does not possess the inventory being transacted within the marketplace, Kaartal is only subject to VAT on our service fees and delivery charges. Nonetheless, for the time being, we have decided to absorb these additional expenses in an effort to support our community of buyers and sellers. We’re in this together.
As a vendor on Kaartal, the responsibility for VAT on the items you are selling lies with you. So, do you need to apply VAT to your goods? If you are an individual retailing a used iPhone or a second-hand sofa, there is no VAT applicable as long as it remains a one-time occurrence. However, if you are a business entity or a store specializing in the trade of pre-owned items, then you must impose VAT on your earnings if you surpass the threshold of 375,000 AED in annual sales. Here are other scenarios to take into consideration.
VAT on second hand items? Still confused?
Scenario 1: An individual marketing new or previously-owned personal possessions on Kaartal
In such cases, VAT does not apply, as this is regarded as a non-recurring activity.
Scenario 2: A business or an individual consistently retailing comparable pre-owned items (e.g., laptops, smartphones, designer bags) on Kaartal
If your annual sales remain below 375,000 AED, no VAT is levied.
Reference: http://gulfnews.com/business/economy/vat/do-not-pay-vat-if-your-bill-doesn’t-have-these-1.2150978
If your annual sales exceed 375,000 AED, VAT is applied at a rate of 5% on the profit you earn.
For instance, suppose you acquire a pre-owned LV bag for 1,000 AED and intend to market it for 1,250 AED. Your profit amounts to 250 AED. You are obligated to collect a 5% VAT on your profit (250 AED x 5% = 12.50 AED). In essence, your item should be listed at 1,262.50 AED (1,250 AED + 12.50 AED), and you will need to remit 12.50 AED in taxes at the conclusion of the year.
Reference: http://blog.dubizzle.com/uae/motors/6552/effect-vat-car-market-uae/
Scenario 3: An individual marketing new items for profit on Kaartal
If your annual sales are below 375,000 AED, no VAT is imposed.
If your annual sales surpass 375,000 AED, VAT is applied at 5% of the selling price.
Reference: http://whatson.ae/dubai/2017/10/everything-residents-need-know-vat-uae/
Scenario 4: A business retailing new items for profit on Kaartal
If your annual sales are below 375,000 AED, no VAT is applied.
If your annual sales exceed 375,000 AED, VAT is charged at a rate of 5% of the selling price.
Wow,😘