You’ll pay 5% VAT on building parking fees
dubai — Residential rents have been exempted from value-added tax (VAT), but UAE residents will have to shell out the 5 per cent tax on parking fees of their buildings.
Tax experts have said that VAT would be applicable to the parking fee if it is charged in addition to the rent. However, if the fee is part of the lease rent, VAT won’t be applicable, said Nirav Shah, director, Fame Advisory. Multi-storeyed buildings constructed specifically for parking will also charge VAT from users, he added.
dubai — The UAE residents have been relieved from the valueadded tax on their rental lease, but they will have to pay VAT on the parking charges in their residential building, according to tax experts. They added that if the parking is charged separately in addition to rent, the VAT would be applicable to such parking.
“If parking is charged separately in addition to lease rent, yes, parking charges will be subject to VAT,” said Nirav Shah, director, Fame Advisory. He noted that if the building owner charges for parking as part of residential rent and parking is given as part of property, then VAT will not be applicable on that. Revealing further details, he said the buildings dedicated only for parking will need to charge VAT from the end-users.
According to Pratik Shah, partner, WTS Dhruva Consultants, the parking charges may be liability of tenant based on legal contract arrangement.
However, payment of VAT related liability is on service provider. But if the tenant agrees to pay for VAT based on contractual arrangement — liability is on tenant wherein the cost of VAT can be passed on. But If not, paying VAT
If parking is charged separately in addition to rent, yes, parking charges will be subject to VAT.”
Nirav Shah, director, Fame Advisory
becomes building owner’s responsibility. “In case of two separate charges — one for lease rent and one for parking charges, then parking charges could be liable to VAT as provision of service. Parking charges at commercial premises shall also be liable to VAT at 5 per cent,” added Shah.
As part of GCC-wide agreement, the UAE will impose 5 per cent VAT from January 1 on a host of goods and services.
However, the public parking, according to Nirav Shah, is likely to be free of VAT as part of public transport, but it’s not yet clarified.
“As regards paid public parking, one may need to wait for clarification from government authority,” added Pratik Shah.
waheedabbas@khaleejtimes.com