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Under the VAT regime in the UAE, not all goods qualify to be sold under profit margin scheme. The list of such goods is very specific. However, these goods may only be supplied under the scheme where they were subject to VAT before the supply. The list is bulleted below:

• A five-per cent levy will apply to certain goods following a GCC agreement last June.

• Second hand Goods. (tangible moveable property that can be used further as it is or after repair)
• Antiques. (goods that are over 50 years old)
• Collector’s Items (stamps, coins, currency and other pieces of scientific, historical or archaeological interest)

As the profit margin scheme is applicable to specific goods, there are also few conditions to be satisfied for its applicability. These conditions were also clarified in the public clarifications vide circular
No: VATP002.

• • The goods must be purchased from a non-taxable person or by a taxable person who pays VAT under profit margin scheme.
  • The taxable person made a supply of the goods where input tax was not recovered.

However, it is to be noted that a taxable person will not be allowed to the profit margin scheme if he has issued a tax invoice or any other document mentioning an amount of VAT chargeable for supply.

Also, goods which were purchased during a period in which they would not have been subject to VAT are not eligible for this scheme.

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