A Federal Decree-Law has been revealed on value-added tax (VAT) by HH Sheikh Khalifa bin Zayed Al Nahyan.
Due to be introduced on 1st January 2018, VAT in the UAE will be among the lowest in the world, at a rate of just five percent.
The decree-law is the first step by the UAE government to introduce a tax framework to strengthen the national economy.
According to the law, the tax will be enforced on the import, transfer and supply of goods and services. However, exceptions will apply to sectors where supply is deemed zero-rate, such as education, healthcare and property, where businesses can reclaim tax from the government.
HH Sheikh Hamdan bin Rashid Al Maktoum, UAE minister of finance and chairman of the Federal Tax Authority, explained: “The Federal Decree-Law issued by HH Sheikh Khalifa bin Zayed is the bedrock of the UAE’s planned tax system, which was designed to meet the most stringent of standards and best practices.
“The Value-Added Tax, which is set to be implemented across all GCC countries over the next two years, will bring a new revenue stream for the national economy and GDP.
“This, in turn, will ensure consistency in the high quality of government services, to mirror the UAE’s advanced position on several global competitiveness indexes.
“The new tax system will provide extra support for the government to implement the vision of the UAE leadership and build a diversified and productive knowledge economy.”
The Federal Tax Authority has also launched a new online portal for business owners and consumers to find out more about VAT and excise tax laws in the UAE. You can register for tax payment, take part in workshops and seek answers in the Q&A platform.
For more information, visit: tax.gov.ae