Private used car sales between individuals in the UAE will be exempted from paying the five per cent value added tax (VAT), which will come into effect on January 1, 2018.
The tax will be levied on used cars sales only when the seller has a formal economic activity registered with the Federal Tax Authority (FTA), according to Al Bayan newspaper.
“Used car sales between parties who are not engaged in formal car trade activities are exempted,” said FTA director-general Khalid Al Bustani.
The 5pc tax will also be imposed on the profit margin when used cars are sold by showrooms registered with the FTA.
Meanwhile, VAT will be levied on new cars, like all goods and services stipulated in the federal decree law.