On August 27, 2017, the president of the UAE signed a law presupposing a change in the tax legislation of the country, namely, the introduction of a value-added tax. This decision was made within the framework of the economic policy of the closed international organization CCASG, which also includes Bahrain, Oman, Kuwait, Qatar and Saudi Arabia. According to the Law, each taxpayer will be obliged to register and submit reports annually to the tax authorities in Arabic or any other language, but with translation into Arabic. The standard rate of VAT in the UAE will be 5%, but there will be some exceptions that provide for a zero-rate tax or full exemption from it. The zero rate will be applicable in such areas as the export of goods and services outside the CCASG, international transportations, operations with certain types of precious metals, the primary sale of real estate (subject to its implementation within 3 years after completion of the construction), the supply of air, sea and land transport, as well as educational and medical services. The provision of certain types of financial services, as well as transactions with residential real estate, land and local passenger transport are exempted from value-added tax.
It is important to note that art. 50-52 of the Law refers to the so-called “Designated Zones”, which will be considered as being outside the UAE. The application features of VAT to the enterprises registered in these zones will be regulated by the separate by-laws that are planned to be developed and adopted by the end of this year. The Law itself will come into force on January 1, 2018. Value added tax is introduced in UAE
On August 27, 2017, the president of the UAE signed a law presupposing a change in the tax legislation of the country, namely, the introduction of a value-added tax. This decision was made within the framework of the economic policy of the closed international organization CCASG, which also includes Bahrain, Oman, Kuwait, Qatar and Saudi Arabia. According to the Law, each taxpayer will be obliged to register and submit reports annually to the tax authorities in Arabic or any other language, but with translation into Arabic. The standard rate of VAT in the UAE will be 5%, but there will be some exceptions that provide for a zero-rate tax or full exemption from it. The zero rate will be applicable in such areas as the export of goods and services outside the CCASG, international transportations, operations with certain types of precious metals, the primary sale of real estate (subject to its implementation within 3 years after completion of the construction), the supply of air, sea and land transport, as well as educational and medical services. The provision of certain types of financial services, as well as transactions with residential real estate, land and local passenger transport are exempted from value-added tax.
It is important to note that art. 50-52 of the Law refers to the so-called “Designated Zones”, which will be considered as being outside the UAE. The application features of VAT to the enterprises registered in these zones will be regulated by the separate by-laws that are planned to be developed and adopted by the end of this year. The Law itself will come into force on January 1, 2018.