The long-anticipated value added tax (VAT) has finally taken a form and the Ministry for Finance of the UAE has announced workshops will be held in order to prepare companies for the implementation. The ministry also announced that program according to which the VAT and the excise tax will be implemented. Our Dubai company formation consultants can offer more information on the introduction of the VAT.
According to officials, there will not be many changes to the taxation system once the value added tax will be introduced, the only requirements for companies being to register for the VAT, to keep accurate accounting books and to charge the tax to their clients.
There will be two VAT rates:
Apart from these, there will also be goods and services exempt from VAT charges, among which education, healthcare, public transportation and financial services. Insurances and real estate transactions such as sales and rentals will also be exempt from the VAT.
It is important to know that the VAT imposed in the UAE has one of the lowest standard rates in the world which will bring insignificant changes to the living costs in this country. The VAT will be introduced starting with January 1st, 2018. We would also like to remind you that we offer accounting services for Dubai companies.
Another tax to be introduced in the UAE is the excise tax which be implemented this year. This tax will only apply to tobacco and related products and soft and energy drinks. While tobacco and energy drinks will be imposed a 100% excise tax, soft drinks will be levied a 50% excise tax.
The first thing to take into consideration is that not all companies will be required to register for VAT. The UAE will follow other countries’ models and require only business with a certain annual turnover to register for the VAT. Also, this registration will mean that UAE companies will be allowed to be credited for the VAT they pay.
For the economy of the country, the introduction of the VAT will mean the creation of more jobs related to the accounting field which is will have a positive impact on the labor market. Moreover, the VAT amounts entering the national budget will be destined to investments and further development of the economy.
For full information on the VAT and assistance is setting up a business in the UAE, please contact our company incorporation agents in Dubai.