For many years there were no taxes such as VAT and Excise in the UAE. Oil revenue was adequate for government expenditure. However, with the global changes, tax revenue has become necessary. Eligible persons for tax registration are expected to begin registration immediately from mid-September 2017.
Unlike many other countries across the world where tax registrations have begun manually, the UAE has introduced electronic registration right from the start, which will make the FTA work easier.
In this article, we are going to look at this critical new development – registration of VAT and excise taxes in the UAE. In future articles, we will discuss tax as in continues to evolve in the UAE.
Expected Revenue
The introduction of the taxes in the UAE is expected to diversify further sources of government revenue. The VAT will be at the rate of 5% and it is expected to generate US dollars 3.24bn (1DHs =0.27 US$) during the first year.
Excise taxes will be on tobacco products at the tax rate of one hundred (100) percent; energy drinks at the tax rate of one hundred (100) percent, while the tax rate for soft drinks will be fifty (50) percent.
The excise taxes are expected to generate US dollars 1.89bn (1DHs =0.27 US$) in the first year.
Tax Procedures Law
Earlier, the UAE had issued the Tax Procedures Law (TPL) under federal law number (7) of 2017, which details the administration and implementation of taxes in the UAE. The only taxes expected immediately are VAT and excise taxes. Other taxes may be introduced later.
TPL also lists the obligations and rights of taxpayers under the tax laws. Generally, the TPL is a guide for the operations of the taxes in the UAE from the FTA and taxpayer perspectives. The relationship between the FTA and the taxpayer is guided by the TPL.
According to the agreements between the Gulf Cooperation Council (GCC), other member countries are expected to launch their taxes soon. This will be to diversify the government revenue base and stem unfair competition in the region.
The introduction of the taxes in the GCC is expected to have direct and indirect effects on East Africans.
Read our earlier blog post on the “Effects of Saudi Arabia VAT on Kenyans,”
For more information on registration and the operations of the VAT and Excise taxes in the UAE, visit www.tax.gov.ae
Feel free to send us questions or topics on tax and investments in Kenya that you would wish to be covered in this Website.
Disclaimer
This post is for general overview and guidance and does not in any way amount to professional advice. Hence, www.taxkenya.com, its owner or associates do not take any responsibility for results of any action taken on the basis of the information in this post or for any errors or omissions. Taxpayers in the UAE must always rely on the most current information from the FTA.
