Benefits of New Taxes in UAE will Add More Profit in Fiscal

Benefits of New Taxes in UAE will Add More Profit in Fiscal

The UAE’s Federal Tax Authority has announced to levy 100 per cent tax on energy drinks and tobacco, 50 percent on carbonated beverages is going from the fourth quarter of this year. The main aim of implementing VAT and excise duties on consumer goods in UAE is to expand the government revenue. After the implementation of VAT in UAE, it plays an important role in accomplishing social objectives of the country and it goes beyond the perceived fiscal compulsions resulting from lower oil prices.

World Health Organisation (WHO) and the Tobacco Free Initiative has reported that 10 percent increase in the price of a cigarette could reduce the demand by 4 percent in high-income countries. In-low-and-middle-income countries, this price increases around 5 percent. The WHO report on the Global Tobacco Epidemic 2015 stated that, approximately six million people die every year due to tobacco-related diseases. It is also stated that around 25 to 30 percent adult population in UAE vaporise some kind of tobacco, which is hazardous to their health.
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100% tax To be Levied on energy drinks and tobacco in UAE from 1st January 2018

UAE Tax impact on alcohol

The Federal Tax Authority has announced a 100 per cent tax on tobacco, energy drinks whereas 50 per cent on carbonated beverages.

Products Tax
Tobacco Products 100.00%
Energy Drinks 100.00%
Carbonated Drinks 50.00%
Soft Drinks 50.00%

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. Read More

UAE Economy 2018: Non-Oil private Growth improves in June

UAE non-oil GDP

UAE Economy 2018 Update, The Non- Oil growth is forecasted to increase by 3.3 percent in 2018, which reflects more gradual fiscal consolidation, stronger global trade, and higher Expo 2020 investment.

The non-oil private sector economy grows to 57.1 in June, up from 56.5 in May.

The UAE’s non-oil private sector improved to the greatest field in the year-to-date, buoyed by a strong branch of new business and output growth, according to the latest UAE PMI survey.

Tamirisa said that the UAE is “adjusting well to the new oil market realities” and voiced approval for the country’s “robust policy responses” underpinned by its large financial buffers and well-diversified economy.

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How does VAT work for a business in UAE?

How does VAT work

VAT is an indirect tax. It applies to the consumption of goods or services at each stage of the supply chain, starts from manufacturing and ends at consumption. VAT is levied by VAT registered businesses which supply goods and services to operate their business. VAT has also apply to the importation of goods and services.

VAT levied at each stage of the supply chain. It is ultimately borne and incurred by the end consumer whereas it is collected by the registered businesses acting as a tax collector on behalf of the Government. Read More

How VAT will Impact UAE Consumers

VAT impact on consumers

VAT is an indirect tax and has levied at each stage of supply chain start from manufacturing to consumption. VAT has been implemented from 1st January 2018 in UAE and other Gulf Countries at the rate of 5 percent. According to Khaleej times, It has been disclosed that 94 basic food items would be exempted from the VAT as well as services which include health, education, bicycles and social services would be tax exempt. Yet VAT laws has not been disclosed in UAE or other GCC countries, however, there is no official confirmation which basic food items will be exempted from the tax.

Finbarr Sexton, Mena Indirect Tax Leader at Ernst & Young stated that there has been no official announcement of 94 basic food items that are zero rated for VAT purposes. Sexton also added that We expect that Basic food items will be zero rated for the implementation of VAT purposes and these basic food items are exempt from the customs duties and we expect the same food items with limited additions to be VAT zero rated.

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Impact of VAT on Oil and Gas Industry in GCC

vat on oil and gas

Gulf Cooperation Council (GCC) is one the famous region for Oil and Gas Industry across the world as well as it holds major crude oil reserves. It is one of the largest exporters and producers of crude petroleum services. An oil and gas industry plays an important role in the GCC accounting for a large chunk of the government revenues. Due to Implementation of VAT in GCC from 1st July 2018, how it affect an oil and gas sector.

According to the framework agreement signed by the six countries of GCC, Some or all parts of the supply chain in Oil and Gas Industry in GCC will be zero- rated supplies for VAT purposes notably in relation to exploration and production activities. Read More