VAT on sale of vouchers shall depend upon the consideration received. Taxability of vouchers can be as follows:
|Where consideration received exceeds advertised monetary value||Taxable|
|Where consideration received does not exceed advertised monetary value||Not taxable|
- When a company gives free gift vouchers to customers, it will be exempt.
- Tax rate: 5%
- Taxable value:
|Entire consideration received in monetary||value = consideration (-) tax.|
|All or part consideration is not monetary||value = monetary + market value of non-monetary part of consideration (-) tax|
- Date of supply: date of issuance or supply.
Monetary value: Value for a resource, product or service in currency terms which a person, business or the market considers.
For example, ZARA runs a campaign, Where a gift voucher is given worth AED 100 on every purchase made of AED 1000 or more. Here, ZARA (supplier of a voucher) is not receiving any consideration i.e the consideration received does not excess advertised monetary value. In such a case sale of voucher shall not be taxable.
However, a company based in UAE ties up with ZARA Dubai for providing its employees with free ZARA vouchers. The company, in turn, pays ZARA AED 105 for each voucher of AED 100. Here, Sale of a voucher from ZARA to the company shall qualify as taxable but a voucher given by the company to employees shall not be taxable.
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