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UAE implementing 5pc value added tax on Jan 1

UAE implementing 5pc value added tax on Jan 1

The UAE’s Federal Tax Authority has announced a final list of products and services that will be subject to an impending 5 per cent value added tax rate on January 1.
Other select goods and services will be zero-rated or exempt from the tax in areas including education, healthcare, oil and gas, transport and real estate.
Certain government and non-profit activities will also come outside of the tax system, including those carried out by the government with no competition from the private sector.

The UAE Cabinet will soon issue a decision to identify government bodies and non-profit organisations that are not subject to the tax.
New fines were also announced by the Ministry of Finance.
Companies must register for VAT if they sell goods or services subject to the tax exceeding Dhs375,000 ($102,00).
Those that sell goods or services worth less can voluntarily register ahead of the tax’s broader implementation for all companies.
The VAT registration procedure is free of charge and can be completed online via the e-services portal on the FTA website.
All businesses must submit an application for registration as soon as possible in order to avoid the risk of missing the January 1, 2018, deadline, which would entail the administrative penalties stipulated under the law.
Under the new rules, the penalty for those who fail to pay tax is no less than Dhs500 ($136) and no more than triple the value of the tax on the transaction in question.
The UAE and Saudi Arabia are leading the Gulf Cooperation Council countries in implementing the tax on January 1, 2018. The other Gulf states are expected to follow in the next two years, according to a ME website.