VAT in UAE: Do you pay VAT on second hand items?

Generally no, but there are exceptions…

The introduction of VAT in the UAE has people worried. It increases the cost of living for everyone in already tough economic times. Fortunately, buying and selling second hand items on Melltoo is still generally a VAT free activity. Since Melltoo doesn’t own the inventory being sold in the marketplace, Melltoo is only responsible for VAT on our selling fees and courier charges. However, for the time being, we have decided to absorb the additional costs in an effort to support our community of buyers and sellers. We’re in this together.

As a seller on Melltoo, you are responsible for VAT on the products you are selling. So do you have to charge VAT on your items? If you are an individual selling a used iPhone or second hand sofa, there is no VAT applicable as long as it’s a one-time activity. However, if you are a business or shop in the business of selling second hand items, then you must charge VAT on the profit you made if you sell more than 375,000 AED a year. Here are other scenarios to consider.  

Scenario 1: Individual selling new or used personal belongings on Melltoo

There is no VAT since this is considered a one-time activity.

Reference: https://www.khaleejtimes.com/business/vat-in-uae/will-vat-apply-on-buying-or-selling-used-personal-goods

Scenario 2: Business or individual regularly selling similar used items (e.g. laptops, smartphones, designer bags) on Melltoo

If you sell less than 375,000 AED per year: No VAT charged

Reference: http://gulfnews.com/business/economy/vat/do-not-pay-vat-if-your-bill-doesn-t-have-these-1.2150978

If you sell more than 375,000 AED per year: VAT is charged at 5% on the profit you make.

For example, you purchase a used LV bag from someone at 1000 AED and you want to sell it for 1250 AED. Your profit is 1,250 – 1,000 AED = 250 AED. You are liable to collect 5% VAT on your profit (250 AED x 5% = 12.50 AED).  In other words, your item should be priced at 1,262.50 AED (1,250 + 12.50 AED) and you will have to pay 12.50 AED in taxes at the end of the year.

Reference: http://blog.dubizzle.com/uae/motors/6552/effect-vat-car-market-uae/

Scenario 3: Individual selling new items for profit on Melltoo

If you sell less than 375,000 AED per year: No VAT charged

Reference: https://www.khaleejtimes.com/business/vat-in-uae/is-your-uae-grocery-illegally-charging-vat-find-out-here-

If you sell more than 375,000 AED per year: VAT is charged at 5% of sale price.

Reference: http://whatson.ae/dubai/2017/10/everything-residents-need-know-vat-uae/

Scenario 4: Business selling new items for profit on Melltoo

If you sell less than 375,000 AED per year: No VAT charged

If you sell more than 375,000 AED per year: VAT is charged at 5% of sale price

Published by

Sharene Lee

Co-founder of Melltoo, researcher/educator and mother of 5. Follow through is my forte.