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VAT on sale of vouchers shall depend upon the consideration received. Taxability of vouchers can be as follows:

  1. Taxability:
Consideration receivedTaxability
Where consideration received exceeds advertised monetary valueTaxable
Where consideration received does not exceed advertised monetary valueNot taxable
    When a company gives free gift vouchers to customers, it will be exempt.
  1. Tax rate: 5%
  2. Taxable value:
ConsiderationTaxable Value
Entire consideration received in monetaryvalue = consideration (-) tax.
All or part consideration is not monetaryvalue = monetary + market value of non-monetary part of consideration (-) tax
  1. 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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The entire contents of this article is solely for information purpose and have been prepared on the basis of relevant provisions and as per the information existing at the time of the preparation.. It doesn't constitute professional advice or a formal recommendation. The author has undertook utmost care to disseminate the true and correct view and doesn't accept liability for any errors or omissions. You are kindly requested to verify & confirm the updates from the genuine sources before acting on any of the information's provided herein above.

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