VAT

Taxes Information

UAE TAX LAW

There are more than 40 free zones across the seven emirates in UAE. This includes the 20 designated zones that have distinct VAT treatment, regulations and laws. This way, doing business in UAE can be a complicated journey. However, when it comes to accounting and tax laws, UAE is considered to be one of the easier places in the world which is a benefit for UAE businesses. As per the report of World Bank, UAE comes in the first place for ease of paying taxes. Given below are some factors that shape the tax environment in UAE. 

BUSINESS & PERSONAL TAX

There is no personal, capital, corporate and profits taxes in UAE. This is the reason why the tax compliance and accounting complexity is not as complicated in UAE as in other areas of the world.

VAT

 Emirates have first introduced VAT in January 2018 levied at the rate of 5%. VAT has been introduced and implemented in coordination with other Gulf Cooperation Council Countries. The implementation of VAT has made the tax system in UAE a bit complicated since as per the law every VAT transaction must be documented and paid on monthly or quarterly basis depending on the turnover size. VAT income is used by government in providing the high-quality services to its public. 

EXCISE TAX

The Federal Tax Authority has introduced excise tax in October 2017 on the goods which are considered as harmful to environment and health including tobacco products (100%), energy drinks (100%) and carbonated drinks (50%). This tax impacts the companies producing, stockpiling and importing the excise warehouse. The government uses the income from this tax for the same purpose as VAT income

TOURIST TAXES

As per the UAE law, there is a tax levied on tourist facilities like resorts, hotels and restaurants. The rate is 10% on room rates and municipality fees and 6-10% on city tax and 6% on tourism fee. 

INTERNATIONAL

UAE has different regulations and controls to ensure that the country is following reputable standards. In December 2017, UAE has included itself on the European Union's 'Back List' of tax heavens to improve fairness and transparency of tax system. In May 2018, the country was included in the 'Grey List' and also became a part of Inclusive Framework on BEPS. Now the country is committed to implement four minimum standards in relation with the given below BEPS actions:
a) Action 5: Countering of harmful tax practices
b) Action 14: Improvement of dispute resolution mechanisms
c) Action 6: Countering tax treaty abuse
d) Action 13: Country-by-country reporting at a minimum
In order to avoid the double taxation on overseas investments, UAE has placed 94 agreements with the other nations. These agreements provide protection if the taxpayers' rights. 

Contact Us

With the increasing complexities in UAE taxation system it is becoming difficult for the small and medium enterprises to follow the tax system in an appropriate way. Akram Fortis Management Consultancy is there to solve your problem. Our skilled force provides complete assistance for your tax compliance issues and always assures the client satisfaction. We are just a click away from you. Call us to get our specialized services for your business.