Introduction of VAT in the UAE


August 27, 2017 in the UAE was signed a law on the collection of value added tax. The law came into force on January 1, 2018. VAT in the Emirates was introduced in the framework of a unified economic policy of the Council of Cooperation of the Arab States of the Persian Gulf (GCC) - a closed international organization, which also includes Bahrain, Kuwait, Saudi Arabia, Qatar and Oman.

The standard VAT rate in the UAE is 5%. Under the law, the taxpayer is obliged to register for activities that are subject to VAT and annually report VAT to the relevant authorities. Reports should be submitted in Arabic (or any other, but with a translation into Arabic).

There are a number of cases established by law when VAT is levied at zero rate:

- export of goods and services outside the GCC countries;

- implementation of international transport and related supplies of goods and services;

- supply of air and sea transport, as well as land vehicles;

- transactions with certain types of precious metals;

- the first delivery of residential property, which takes place within 3 years after the completion of construction;

- provision of educational and medical services and related supplies of goods and services.

Full exemption from VAT is provided only for certain types of financial services, as well as transactions with residential real estate, land and local passenger transport. In addition, according to Art. 50-52 of the new law mention the so-called. "Special zones" (Designated Zones), which for VAT purposes will be considered to be located outside the UAE.