According to the Federal Tax Authority of UAE, VAT is a tax on the consumption or use of goods and services levied at points of sale in the UAE, including telecom sector. VAT is levied at each stage of the "supply chain". In general, the final consumer is the one who bears the cost of this tax, while businesses (including telecom companies) collect and calculate the tax, as a tax collector for the Federal Tax Authority. The percentage of VAT is 5% and will be effective as of January 1, 2018.
For the telecom sector, VAT will be applied as follows:
5% of the total amount of the invoice charged to users.
VAT will be calculated at 5% upon purchase of a new SIM after January 1, 2018. However, as for recharge cards, the tax will not be applied to the face value of the recharge; however, 5% will be applied to prices of the services used by the user from the recharged amount.
As of January 1st, 2018, price of services in the UAE’s telecom sector will be inclusive of VAT, this does not apply to telecom services to which VAT is not applicable pursuant to Federal Law No. 8 of 2017 on Value Added Tax and its Executive Order (e.g. International roaming services).
As explained, the role of telecom companies in the UAE is to collect VAT for the Federal Tax Authority, the core role of the TRA is to ensure that telecom companies comply with the law by implementation of VAT of not more than the 5% declared in the Federal Law No. 8 of 2017 on Value Added Tax as well as to ensure that telecom companies do not apply VAT on exempted services.
For more information on VAT, please visit the Federal Tax Authority website (https://www.tax.gov.ae/index.aspx)