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UAE’s tax authority prepares for excise tax, VAT implementation

UAE’s tax authority prepares for excise tax, VAT implementation

Excise tax takes effect next month, while VAT will be implemented in January 2018

The board of the UAE’s Federal Tax Authority (FTA) has finalised plans for the introduction of excise tax next month and value-added tax (VAT) early next year in the country, it said on Wednesday.

In its second board meeting, the FTA went through the latest developments around the planned nation-wide federal tax laws, including Law No. (7) of 2017 for Tax Procedures, Federal Decree-Law No. (7) of 2017 on Excise Tax and Federal Decree-Law No. (8) of 2017 on VAT.

The authority is also working to issue the executive regulations for each respective law to educate taxable persons on their rights and responsibilities.

Excise taxes – set to be imposed on tobacco products, soft drinks and energy drinks – will take effect from October 2017. The tax rates are 100 per cent for tobacco products and energy drinks and 50 per cent for soft drinks, according to officials.

Also read: UAE to implement tobacco, soft drinks tax in October

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Meanwhile value added tax (VAT) is scheduled to be implemented from January 2018 at a rate of 5 per cent.

Also read: UAE tax authority launches website with details about VAT, excise taxes

All you need to know about the UAE’s tax administration system

During its meeting, the board also adopted the proposed fees and fines, as well as the violations outlined in the new laws.

It also went through the proposed designs for the FTA’s new logo.

“We continue to steadily move forward in our preparations for the nation-wide tax laws in the UAE,” said Sheikh Hamdan bin Rashid Al Maktoum, deputy ruler of Dubai, UAE Minister of Finance and chairman of the FTA.

“We are entering a new phase in the implementation of the tax laws, as we gear up to inaugurate the registration process for taxable companies, as soon as all the necessary legislative, administrative and infrastructure requirements are met.

“The Federal Tax Authority’s website has been designed to meet the highest international standards, facilitate registration and offer a bundle of tax-related services,” he added.

The FTA’s website, launched last month, provides all the information on the upcoming introduction of excise tax and VAT in the country including the legislations regulating them.

For businesses, the website provides advice and guides to help them determine if they are eligible to register, as well as guidance on the registration process. From mid-September, companies will also be able to register with the tax authority through the website.

Read more: UAE tax authority launches website with details about VAT, excise taxes

“The system we are developing will provide ample support for the sustainable social and economic development of the UAE,” said Sheikh Hamdan.

“It will diversify revenue streams and establish sustainable sources of income, allowing the government to carry on with its ambitious plans to develop future-ready infrastructure, and to continue providing high-quality services for the people.”

The FTA is also carrying out workshops and awareness campaigns across all emirates in the country. The first series of awareness sessions on the tax system took place from March to May 2017, as part of which 25 awareness workshops were conducted with more than 15,000 attendees.

The second series of workshops were held in August 2017 – in cooperation with the Chambers of Commerce in the local governments across all emirates – targeting sectors such as real estate, retail and exports, and companies subject to excise tax. There have so far been 10 workshops, attended by more than 5,000 professionals.

The FTA will also be organising workshops for the financial services and insurance sectors, as well as education, health, government, and international organisations and diplomatic missions in the UAE.

Phase two of the sessions will continue until the end of October 2017, with a total of 18 workshops for the business sector and nine for the government sector (local and federal), the FTA added.

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