The Federal Tax Authority has announced a 100 per cent tax on tobacco, energy drinks whereas 50 per cent on carbonated beverages.
The announcement of taxation rates was declared in the first meeting of FTA and chaired by Shaikh Hamdan Bin Rashid Al Maktoum, Deputy Ruler of Dubai and Minister of Finance.
Senior Officials and board members attended the FTA meeting, namely Obaid Humaid Al Tayer, Minister of State for Financial Affairs, Younis Haj Al Khouri, Undersecretary at the Ministry of Finance, Sultan Ahmad Bin Sulayem, Chairman of Ports, Customs and Free Zone Corporation and many more.
Value added tax (VAT) will be levied at the rate of 5 per cent and it is going to implement from 1st January 2018. Shaikh Hamdan said that the VAT was approved by the higher authority to improve the economic conditions in UAE in preparation for the post-oil era.
Shaikh Hamdan said, “The tax procedures law is in the final phase, and will soon be issued and published. The VAT law is being debated by the technical legislative committee in preparation for submitting it to the Cabinet for approval, while the selective tax draft law will be soon discussed by the committee.”
For the successful implementation of VAT in UAE, awareness campaigns were organised by the Ministry of Finance in March about VAT, selective tax and tax procedures.
Senior officials or experts were conducted twenty-three workshops to spread knowledge among people about the VAT implementation in UAE. These workshops cover common topics about VAT such as how to register with the VAT system, explain tax procedures and their obligations.
Health, education services, international transportation, import gold for investment purposes, commodities and exports are exempted from VAT in UAE.
Residential buildings for sale or lease during the first three years in which the building is completed, some financial services and empty plots of land are also exempted from VAT.
All businesses whom annual turnover exceeds Dh375,000 compulsory to register under VAT system. VAT registration will commence in the third quarter of 2017. Businesses whom annual turnover of Dh187,500 and above have an optional to register with the system.
Businesses who are dealing in zero-rated goods and services, they can claim from the government, if any VAT they have paid on costs