Value Added Tax (VAT) is an indirect tax levied on a good as its value increases at each phase of its lifecycle. It is related to a taxpayer’s consumption, and not his/her income. VAT is effective in over 150 nations.
VAT, @ 5%, shall come into effect in the UAE and other GCC countries from 1st January, 2018. Businesses may commence registering for VAT from 1st October, 2017, 3 months prior to the launch date.
The implementation of VAT will provide an alternate source of income to the UAE government, which would in turn contribute in providing high quality public services in the future.
VAT would apply to non-essential consumer products. Anything besides basic food and essential commodities would be taxed in the category of VAT. This encompasses electronics, automobiles, luxury goods, food services, and entertainment.
The Government of UAE has declared that items in about 100 categories like food, education, health, bicycle, fuel, transport and social services would be exempt from value added tax.
Yes, VAT would apply to tourists, implying that they would have to pay VAT while purchasing anything.
With VAT coming to the UAE, there are factors that businesses would have to consider with regard to tax consulting. We at Business Setup Worldwide have our team of experts to help you with company formation, registration and counselling. For any queries on VAT or tax consultation for companies in the UAE, feel free to contact us.