Do I need to pay VAT on sale or purchase of pre-owned goods?
Yes, the Federal Tax Authority (FTA) has issued guidelines to charge 5% VAT on sale or purchase of pre-owned goods such as vehicles and furnitures. However, the amount on which VAT to be levied depends on when the item was purchased.
If the item was purchased before VAT was implemented (January 1st, 2018) and is sold anytime after that, the VAT needs to be applied on the total selling price.
If an item was purchased and sold after VAT was implemented, then VAT needs to be applied on the profit margin. The VAT will be levied on the profit margin, since the seller of the pre-owned goods would have already been taxed at the time of purchase.
Pre-owned goods imported into UAE doesn’t qualify for this scheme. Import of pre-owned goods are always subject to VAT on the total price.