What will be VAT rates in UAE?

Posted on Oct 21, 2017

What will be VAT rates in UAE?

It has become quite clear that the Value Added Tax (VAT) is scheduled to be launched  all across UAE from 1st Jan, 2018. However, when it comes to gain clearance on the applicable VAT rates, there seems to be some kind of ambiguity among traders.

VAT is an indirect tax on consumption and it is applicable on most goods and services and is levied on business transactions, i.e. on goods and services supplied in the course of business. Although VAT applies to most goods and services, in countries where VAT operates there are normally some exceptions.

According to respective tax authority, consumers in UAE would have to pay a standard rate of 5 per cent value-added tax when purchasing most goods and services.

The six states in the Gulf Cooperation Council (GCC) region have decided to implement VAT, which will generate $25 billion (Dh91.8 billion) in tax proceeds every year.

Since VAT is going to be levied on non-essentials, it would be mandatory to pay a tax when buying electronic items, home appliances and other big-ticket goods. If you want to own a brand-new mobile phone that costs Dh2, 600, for example, get ready to pay an extra Dh130.

According to the Ministry of Finance, businesses may need to change their core operations, financial management and book-keeping, technology and human resource mix in order to prepare for VAT.

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