Oxford DMCC News - INTRODUCTION OF 5% VAT IN THE UNITED ARAB EMIRATES (UAE) AS OF 01 JANUARY 2018

December 13, 2017 5:06 pm

The UAE Government has established a ‘Federal Tax Authority’ (FTA) which will be responsible for administering, implementing and collecting Value Added Tax (VAT). The VAT regime is scheduled to start from 1 January 2018, at a standard rate of 5 per cent. All businesses must register for VAT if their taxable supplies exceed AED 375,000/- within a twelve month period.

Businesses with taxable supplies and imports that are less than the threshold but more than the voluntary registration limit of AED187,500/- can optionally register for VAT. The deadline for submission of mandatory registration applications is 4 December 2017.

It is important to note that any services provided by companies in Free Zones (whether classified as a Designated Zone or not), to other Free Zone Companies or to mainland UAE companies, will be subject to VAT, in the same way as mainland UAE companies. Therefore, there is no difference at all in the VAT applicability for Companies providing Services, whether they operate from Mainland UAE or from any Free Zone in UAE.

As per the UAE Federal Cabinet Decision No. 40, the penalty for not registering a taxable person under VAT Law by the due date will be AED 20,000/- .To avoid these Read More