March 22, 2017
The days of tax free living in the UAE is soon coming to an end with a 5% VAT (value added tax) to be introduced on 1 January 2018. While the VAT law has not yet been finalized, the Ministry of Finance announced that it has established a Federal Tax Authority to administer the levy and that companies with annual revenue in excess of AED375,000 per annum would need to register in the second half of 2017.
As its name suggests, The Federal Tax Authority will enforce federal tax laws, conduct audits, collect tax revenues; and in case of non-compliance with issue penalties. It’s primary purpose will be to administer and enforce the VAT.
In addition to a 5% value added tax, excise tax is also to be levied on selected products such as tobacco and fizzy drinks.
The Federal Tax Authority will enforce federal tax laws, conduct audits, collect tax revenues; and in case of non-compliance with issue penalties.
The National reported earlier this week, that the VAT is expected to generate revenues in excess of AED32Billion in its first 2 years and is a clear attempt to further diversify UAE governments revenues away from fossil fuels.
