UAE Releases its domestic VAT Law

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The UAE has released the test of its domestic VAT Law today, Aug 27, 2017.

The UAE Government will be implementing VAT in the country on 1 January 2018. A standard VAT of 5% will be levied on goods and services such as food, consulting services, and maintenance works.

A few of the sectors that have been confirmed to enjoy VAT reliefs are healthcare, education, financial services, and exports. The law also specifies special rules for paying import VAT, defines VAT grouping rules and so on.

Federal Decree-Law No. (8) of 2017 on Value Added Tax has been issued on 23 Aug 2017. This Decree-Law shall be published in the Official Gazette and shall come into effect as of January 1, 2018.

The VAT Law specifies the following:

  • Title One – Definitions
  • Title Two – Tax scope and rate
  • Title Three – Supply
  • Title Four – Tax registration and deregistration
  • Title Five – Rules pertaining to Supplies
  • Title Six – Zero rates and exemptions
  • Title Seven – Calculation of due tax
  • Title Eight – Tax Period, returns, payment and reclaiming of tax
  • Title Nine – Violations and Penalties
  • Title Ten – General Provisions
  • Title Eleven – Closing provisions

The Law refers to Executive Regulations which will provide clarity on the detailed treatment of the various aspects covered in the VAT Law. This is expected to be issued in the near future.

Companies should start their VAT preparation immediately as the implementation date for the law has been set for 1 January 2018.

The FTA website was recently launched and can be accessed here. FTA is the government entity that is responsible for the collection and management of federal taxes.

Businesses will be able to register online for VAT purposes from the middle of September 2017. You can access the English version of the VAT Law on the MoF Website by clicking here.