Is free warranty maintenance service subject to VAT?

If the warranty maintenance is part of the original sale (meaning the product's price already included the cost of coverage for a set period), there's no additional VAT on the warranty service itself when it's delivered — because it was already taxed within the sale price at the point the original invoice was issued. But if warranty or maintenance beyond the free period is sold as a separate service (an additional annual maintenance contract, for instance), that's taxed at the standard 5% as a standalone service, regardless of the original product having come with a warranty.

The common mistake is companies assuming any 'maintenance' service is automatically exempt just because it's tied to a product, without distinguishing between warranty coverage bundled into the original sale price and a separately paid after-sales service. At RASEEKH, we help equipment and appliance sellers correctly classify their warranty and maintenance contracts from the start, so invoicing reflects the right tax treatment for each case.