For the implementation of UAE VAT Law, the Federal Decree-Law No 8 of 2017 comes up with the lowest taxation rates in the world. In the UAE VAT Law, the tax rate decided by the UAE government is 5% 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

Not Everything is in the VAT Law in UAE

some Different types of goods and services are not taxed because they are exempt but others are not taxed because the Tax is zero-rated supplies. All such supplies are VAT-free to the consumer, because of the supply is exempt or zero-rated will make a big difference to the taxable entity making the supply.

There are some main reasons:

  • Some goods and services (like hospitals, education, and healthcare) have to provide social benefits, it’s very necessary to each and every person so the government doesn’t want to make them more costly than necessary.
  • A few things like “bare” land cannot be consumed (and VAT is a tax on consumption).
  • Some other things (like some financial services) are too difficult to tax.

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.

After launching the VAT in UAE  some law creates on Tax so now new VAT is to cover more important thing.

UAE is launched vat and created a stander VAT rate of 5 %. it’s for good for our country because of the benefit of all industries and government sector.
There are purvey about the tax treatment of capital assets, tax adjustments for errors in tax returns and bad debts, apportionment measures, tax on samples and commercial gifts, and on supplies between related parties.

If your invoice in a currency other than the UAE Dirham, you’ll have to convert it and it’s for good in our economy. Tax evasion gets a mention, too. Remember, Federal Law No. (7) of 2017 on Tax Procedures contains more about tax evasion (which is a criminal offense), and the imposition of Penalty Assessments (which is an administrative measure).

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.

Businesses have to more impact after the VAT in UAE and some Vat law will be affected.

This leaves businesses with four months to prepare for VAT, which has for large businesses, Although many large businesses have initiated studies to determine the impact of VAT on their operations, there is still a large section of the business community waiting for the enactment of the Law order to commit financial budgets for VAT-readiness is big projects.

Obviously, businesses should acquaint themselves with what the VAT Law says, and how it will apply to their business. these are the most important thing of any business .starting date for VAT is January 1, 2018, businesses should look, in particular, at the Transitional Rules (Article 80). The UAE has to provide the more Transitional Rules law for different business . its a very useful for all business that they can understand for the new VAT law.

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.

Download UAE VAT Law PDF