Abu Dhabi: It is estimated that around 350,000 businesses will register by year-end for Value Added Tax (VAT) and the Federal Tax Authority will open online registration for tax purposes for businesses in mid-September 2017, head of Federal Tax Authority said on Tuesday.
Both the UAE and Saudi Arabia are implementing a 100 per cent excise tax on tobacco products and energy drinks, and a 50 per cent tax on carbonated drinks.
“The Excise Tax and VAT laws are expected to be issued during the third quarter of this year and the regulations concerning both laws in addition to federal tax procedures are expected to be issued during the fourth quarter of 2017,” said Khalid Ali Al Bustani, Director General of FTA at a press conference in Abu Dhabi.
About 350,000 companies in the UAE will be covered under VAT starting from January 1. It will be rolled out across the UAE and Saudi Arabia. The excise tax will be implemented in the fourth quarter of this year.
All business that meets the minimum annual income of Dh375,000, as confirmed by their financial records, are required for compulsory registration with the VAT system with the value set at 5 per cent.
“We have a plan for the registration of the companies for the VAT and excise taxes through a phased approach and the approach will be based on the size of the turnover of the company, which will be announced at a later stage,” said Mr Al Bustani.
The UAE expects to publish laws on value added tax (VAT) as well as an excise tariff by the end of the current quarter, levies that may increase overall consumer prices by an average one-off hike of 1.4 per cent, a senior official said on Tuesday.
Gulf states are introducing consumption taxes for the first time to create new revenue streams after a three year oil slump dented income and widened deficits.
The implementation of the GCC-wide tax is expected to boost GDP by about 1.5 per cent with the implementation of the 5 per cent VAT, the International Monetary Fund has said.
In the UAE, VAT could generate Dh12 billion in its first year and Dh20bn in its second year, according to Sultan Al Mansouri, the Minister of Economy. – firstname.lastname@example.org