VAT Laws Announced Ahead of Implementation Scheduled for January 2018
The much-anticipated regime Value-Added-Tax (VAT) bring into existence by the President His Highness Shaikh Khalifa Bin Zayed Al Nahyan on Sunday to implement VAT in UAE from 1st January 2018.
For the implementation of Value-Added Tax in UAE, the Federal Decree-Law No 8 of 2017 comes up with the lowest taxation rates in the world. The tax rate decided by the UAE government is 5 percent on the import and supply of goods and services, it will be applicable at each stage of production and distribution and it also includes what is deemed to be a supply.
Sheikh Hamdan Bin Rashid Al Maktoum, Deputy Ruler of Dubai, UAE Minister of Finance and Chairman of the Federal Tax Authority said: “The Federal Decree-Law issued by HH Shaikh 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.”
VAT, which is set to be applicable across GCC countries in the coming two years, is expected to generate revenue for the national economy. Shaikh Hamdan said, “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.”
GCC member countries in UAE are expecting that the new regime will implement one common tax rate under VAT, it totally depends on the readiness of each state member countries in the duration of January 1, 2018, and January 1, 2019, as per the Common VAT Agreement
It is expected that the new taxation system will have the positive impact in terms of economic growth. It clears that the revenue generated from the VAT will be distributed for the development of the of projects which will benefit the society at large scale and enhance the progress level of UAE.
The UAE Federal and emirate governments provide to citizens and residents several different public services such as hospitals, roads, parks, waste control, schools and police services. From the government budgets, these services will be paid.
The new taxation system will provide UAE a new source of income will further distributed for the development of the country and high-quality public services over the coming future. Besides, it will reduce state dependence on oil revenue and other hydrocarbons.
The decree- law furnishes that all supplies of goods and services will impose VAT at the standard rate of five percent excepting some special supplies levies at zero rates and what supplies are exempted as mentioned in the decree- law.