Adding service charge to sales price for VAT purpose but no service tax charged
I run a travel agency in Dubai specialising in booking air tickets. As of now, we are doing ticket sales by adding our commission/service charge to the purchase price. But are not charging any service tax to the customer. Are we doing the right thing?
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VAT should be charged your service charges. In order to charge VAT on the service charges or commission, you have to mention it on the invoices. But as you can't mention teh same on an air ticket so you cannot charge VAT on that.
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International transport of goods and services is zero rated as per UAE VAT Law.It states that all services supplied wrt international transport of goods and services are zero rated. Therefore the service with regard to purchase of international air ticket is zero rated.
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In your case, sale of international air tickets and related services are zero rated. Local travel packages and tourism etc is standard rated. For partial zero rating make one invoice and charge vat on your service charges
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