Dubai - Mubasher: The UAE’s Federal Tax Authority (FTA) has announced that the value-added tax (VAT) will not be imposed on the direct selling of cars between individuals.

However, the tax will be imposed on the sale of used cars if the seller has an official business and is registered with the FTA, Khaled Al Bustani, FTA director-general, told Al Bayan newspaper.

He added that the VAT will not be imposed on selling used cars between an untaxed buyer who purchases the vehicle directly from the owner, who is not registered as a taxed seller with the FTA.

The VAT will also not be imposed if the owner sold his car to a car dealership, on condition that the seller does not sell used cars repeatedly, the top official told the newspaper.

However, the tax will be imposed on used cars sold through taxable and registered car dealerships, Al Bustain revealed, indicating that in this case, the tax will be imposed only on the dealership’s profit margin from selling used cars.

As for new cars, the VAT will be imposed at 5% as is the case with other products and commodities, according to the legislative decree issued by the FTA concerning the VAT.

By applying VAT, it is expected that the UAE will collect revenues between AED 10 billion and AED 12 billion in the first year of implementation.