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UAE’s finance ministry yet to fix VAT rate on goods, services

UAE’s finance ministry yet to fix VAT rate on goods, services

The UAE is set to introduce VAT from January 1, 2018

The UAE’s Ministry of Finance is still in the process of fixing the value added tax (VAT) rates for goods and services, it announced on Monday.

The ministry is currently developing the executive regulations of VAT, said Younis Haji Al Khouri, under-secretary at the ministry.

The VAT rate on all taxable and exempt goods, exports and services will be announced through state-run media organisations as well via the ministry’s official website, he said.

“The ministry is implying maximum disclosure and transparency and will share all information and data related to VAT and its taxable and exempt products as well as the tax rate once the executive regulations have been announced,” Al Khouri added.

The UAE is set to introduce VAT from January 1, 2018 at a rate of 5 per cent.

The tax will be imposed on goods such as electronics, smartphones, cars, jewellery, certain beverages, financial and accounting services, legal services, dining out and entertainment.

However, certain services and goods, including nearly 100 food items, basic health services, transport and public education, will be exempt from the tax.

Businesses making a turnover of Dhs375,000 or more are required to register for VAT, while companies making less than that but exceeding the voluntary registration threshold of Dhs187,500 have a choice to register.

Last week, the UAE’s Federal Tax Authority (FTA) started online VAT registration for businesses through its website.

The imposition of VAT is anticipated to provide a big boost to the GCC economies, which have been hit hard by depressed oil prices in recent years.

In the UAE alone, the tax is expected to generate approximately Dhs12bn in its first year of introduction.

Also read: VAT to create over 5,000 jobs in the GCC – analyst

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