My favourite go-to restaurant has changed its policy on the use of a two-for-one voucher app. The voucher is now deducted from the basic price of the main meal without the municipality fee, service charge and VAT. Then they add the 25 per cent back to the total bill, even though the menu has all taxes included in the prices. Therefore, it’s not two-for-one anymore. This made my steak Dh45 more expensive than I normally pay. Is this correct?
ES Dubai
The treatment of vouchers and discounts within VAT legislation is complicated and on first read can appear ambiguous. As with most legal issues, it’s all about interpretation and the response below is my personal interpretation.
My experience this year is that most food and beverage outlets participating in the two-for-one app concept are removing the cost of the second meal from the bill in full, without adding back the taxes on the free menu item.
The correct VAT treatment hinges on whether the free item is considered to be a discount or exchanged for a voucher. I’ve read the legislation, Executive Regulations and various Federal Tax Authority-issued guides on this subject and my opinion is that although these two-for-one deals are commonly referred to as “vouchers”, they do not fall under that definition from a legal VAT perspective, rather VAT should be accounted for as a discount.
Article 40 of the VAT law and Article 28 of the Executive Regulations cover discounts and vouchers. It says in the case of a discount, the value of supply, which is the amount on which you pay VAT, may be reduced if the customer has benefited from the reduction in price and the supplier funded the discount. The value of a discount is the amount by which the price paid is reduced.
Article 40 defines a voucher as any instrument that gives the right to receive goods against a stated value, including the right to receive a discount on the price of the goods. It appears this is the part of that law that your favourite restaurant is following.
However, the two-for-one vouchers we refer to here do not have any stated monetary value and the law clearly says that a voucher must include the monetary value for which it may be redeemed and that this value is identifiable at the time the voucher is issued. That’s clearly not the case here. The vouchers are not supplied by the restaurant themselves and have no value until used. Many F&B outlets offer two-for-one deals without any vouchers involved and outlets included in the apps can change mid year.
The FTA have issued a series of guides on their website, one of which covers the VAT percentage on discounted items and specifically mentions “buy one, get one free” deals.
The guide says that in case of discounts on the regular sale price, VAT will be applicable and included in the discounted price and not the original price. So, my personal conclusion is that these deals are discounts rather than vouchers and VAT should not be applied on the free item.
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The company I work for has received a VAT invoice from a consultant based outside the UAE. Can we reclaim this VAT? CM, Abu Dhabi
You don’t mention whether you have been charged UAE VAT or VAT from another regime. It is possible the consultant has a number of clients in the UAE and has therefore registered for UAE VAT. Non-resident companies have similar obligations to register for VAT as UAE resident companies. If the consultant is charging VAT at 5 per cent and has a TRN number you can check whether he is registered for UAE VAT by using the TRN verifier on the FTA’s website.
If the company is registered with the FTA then you can reclaim the VAT in exactly the same way as if charged by a UAE resident company.
It is more likely that the consultant is based in a location that operates its own VAT regime and he has charged you local VAT. For example, if you have been charged UK VAT then you cannot reclaim this unless you are registered for the tax in the UK. Note that many VAT regimes operate similarly, and I would ask him to check he is obligated to charge you VAT. A consultant operating here, supplying services to an overseas company is likely to be able to treat this as an export of services, which attracts zero per cent VAT.
Lisa Martin, a chartered accountant with over 20 years commercial finance experience, is the founder of accounting, auditing and VAT consultancy, The Counting House. Email any VAT queries to pf@thenational.ae
New schools in Dubai
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The smuggler
Eldarir had arrived at JFK in January 2020 with three suitcases, containing goods he valued at $300, when he was directed to a search area.
Officers found 41 gold artefacts among the bags, including amulets from a funerary set which prepared the deceased for the afterlife.
Also found was a cartouche of a Ptolemaic king on a relief that was originally part of a royal building or temple.
The largest single group of items found in Eldarir’s cases were 400 shabtis, or figurines.
Khouli conviction
Khouli smuggled items into the US by making false declarations to customs about the country of origin and value of the items.
According to Immigration and Customs Enforcement, he provided “false provenances which stated that [two] Egyptian antiquities were part of a collection assembled by Khouli's father in Israel in the 1960s” when in fact “Khouli acquired the Egyptian antiquities from other dealers”.
He was sentenced to one year of probation, six months of home confinement and 200 hours of community service in 2012 after admitting buying and smuggling Egyptian antiquities, including coffins, funerary boats and limestone figures.
For sale
A number of other items said to come from the collection of Ezeldeen Taha Eldarir are currently or recently for sale.
Their provenance is described in near identical terms as the British Museum shabti: bought from Salahaddin Sirmali, "authenticated and appraised" by Hossen Rashed, then imported to the US in 1948.
- An Egyptian Mummy mask dating from 700BC-30BC, is on offer for £11,807 ($15,275) online by a seller in Mexico
- A coffin lid dating back to 664BC-332BC was offered for sale by a Colorado-based art dealer, with a starting price of $65,000
- A shabti that was on sale through a Chicago-based coin dealer, dating from 1567BC-1085BC, is up for $1,950
UPI facts
More than 2.2 million Indian tourists arrived in UAE in 2023
More than 3.5 million Indians reside in UAE
Indian tourists can make purchases in UAE using rupee accounts in India through QR-code-based UPI real-time payment systems
Indian residents in UAE can use their non-resident NRO and NRE accounts held in Indian banks linked to a UAE mobile number for UPI transactions
Ticket prices
General admission Dh295 (under-three free)
Buy a four-person Family & Friends ticket and pay for only three tickets, so the fourth family member is free
Buy tickets at: wbworldabudhabi.com/en/tickets
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A MINECRAFT MOVIE
Director: Jared Hess
Starring: Jack Black, Jennifer Coolidge, Jason Momoa
Rating: 3/5
In numbers: PKK’s money network in Europe
Germany: PKK collectors typically bring in $18 million in cash a year – amount has trebled since 2010
Revolutionary tax: Investigators say about $2 million a year raised from ‘tax collection’ around Marseille
Extortion: Gunman convicted in 2023 of demanding $10,000 from Kurdish businessman in Stockholm
Drug trade: PKK income claimed by Turkish anti-drugs force in 2024 to be as high as $500 million a year
Denmark: PKK one of two terrorist groups along with Iranian separatists ASMLA to raise “two-digit million amounts”
Contributions: Hundreds of euros expected from typical Kurdish families and thousands from business owners
TV channel: Kurdish Roj TV accounts frozen and went bankrupt after Denmark fined it more than $1 million over PKK links in 2013
The National's picks
4.35pm: Tilal Al Khalediah
5.10pm: Continous
5.45pm: Raging Torrent
6.20pm: West Acre
7pm: Flood Zone
7.40pm: Straight No Chaser
8.15pm: Romantic Warrior
8.50pm: Calandogan
9.30pm: Forever Young
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Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
Jewel of the Expo 2020
252 projectors installed on Al Wasl dome
13.6km of steel used in the structure that makes it equal in length to 16 Burj Khalifas
550 tonnes of moulded steel were raised last year to cap the dome
724,000 cubic metres is the space it encloses
Stands taller than the leaning tower of Pisa
Steel trellis dome is one of the largest single structures on site
The size of 16 tennis courts and weighs as much as 500 elephants
Al Wasl means connection in Arabic
World’s largest 360-degree projection surface
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