Introduction to VAT IN UAE

Value-added taxation in UAE was introduced as an indirect value added tax (VAT) into the United Arab Emirates taxation system from 1 January 2018. The existing general sales tax laws were replaced with the Value Added Tax Act (2018) and associated VAT rules.The introduction of other alternate revenue measures including corporate and income taxes are not under consideration for the time being, according to Minister of State for Financial Affairs Obaid Humaid Al Tayer.

As per latest valuation,the increased in growth and pressure on the ( Gulf Countries)GCC's governments to provide certain kind of infrastructure to support growing urban centers, the Member States of the Arabic Gulf Co-operation Treaty, which altogether make up the Gulf Co-operation Council (GCC), have felt the need to introduce a tax system in the region.
In fact, the United Arab Emirates (UAE) has confirmed that the government officials are studying the situation and considering implementation of a value-added tax ( VAT in UAE 2018).


What is the VAT?
What is the tax rate in UAE?
Corporate Tax in UAE?

What is the VAT?

The Value Added Tax, or VAT, in the UAE is a general, broadly based consumption tax assessed on the value added to goods and services. However,It applies more or less to all goods and services that are bought and sold for use or consumption in the UAE. Moreover, goods which are sold for export or services which are sold to customers abroad are normally not subject to VAT. Conversely imports are taxed to keep the system fair for United Arab Emirates producers so that they can compete on equal terms on the Arabian market with suppliers situated outside the Union.

What is the tax rate in UAE?

The VAT in UAE basically depends on any sale is a sum of Percentage (%) of the sale price but from this the taxable person is entitled to deduct all the tax already paid at the preceding stage. Mean while, Twice the taxation in UAE is avoided and tax is paid only on the value added at each stage of production and distribution.Moreover  In this way, as the final price of the product is equal to the sum of the values added at each preceding stage, the final VAT paid is made up of the sum of the VAT paid at each stage at United Arab Emirates.

Corporate Tax in UAE?

While we Consider the Corporate Tax in UAE, the exception of banks as well as oil companies no corporate tax is in practice payable by businesses in Dubai. Although the corporate tax regime in the UAE is relatively limited at this time we can foresee certain structural challenges associated with any extensive broadening of the existing corporate tax base or any rate increases. Oil companies' pay up to 55% tax on UAE sourced taxable income and banks pay 20% tax on taxable income as updated.

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