The most common type of indirect tax based on consumption of goods and services is the Value Added Tax (VAT), which was implemented in the UAE and Saudi Arabia on 1 January 2018 and consequently became an integral part of businesses in the UAE.
It is to be noted that this tax will be implemented across the GGC countries, but at different dates and at different rates.
The current rates applicable on supply of goods and services is 5% (Standard Rated) and/ or 0% (Zero Rated) , and chargeable at every step of the supply chain, subject to limited exceptions such as supply of basic food items, educational institutions, healthcare and their core activities which are exempt from VAT.
The UAE established the ‘FEDERAL TAX AUTHORITY’ (FTA) in 2016 under the Federal Law by Decree No. 13 as the overseeing authority for VAT. Consequently, the authority takes charge of managing and collecting federal taxes and related fines, in addition to distribution of tax – generated revenues and application of tax – generated procedure within the UAE.
For more information: Getting ready for VAT
For more information: Getting Ready for Excise Tax
PAUL & HASSAN CHARTERED ACCOUNTANTS ARE A FTA REGISTERED TAX AGENT WITH