Latest developments on VAT in UAE and Corporate Tax in the UAE

Latest developments on VAT in UAE and Corporate Tax in the UAE

 

  • Following the UAE Ministry of Finance’s (MoF) role in developing and coordinating the country’s financial policies; the Ministry confirms that the UAE has been conducting studies on the implementation of a VAT draft law, along with the other GCC countries. This is based on a previous agreement between the UAE and all GCC states to impose a VAT tax law simultaneously. The draft law is still pending and under negotiation due to the absence of a final agreement between GCC countries on the tax rate and a list of tax exemptions.
  • MoF has conducted several feasibility studies on taxation and its social and economic implications for the following years: 2008, 2010, 2012 and the latest study was for 2014, which was completed in early 2015.  The studies will determine the impact of taxes on the growth of the regional economy and UAE’s global competitiveness.
  • An immediate announcement will be made once a final agreement on imposing a VAT  in UAE law is reached. Concerned sectors and entities will have around 18 months after imposing the law to implement and fulfill the requirements of their tax obligations. This timeframe was set due to the UAE’s previous approval of the draft VAT law framework, to be applied on a GCC level.
  • MoF, in coordination with the UAE’s local entities, prepared draft laws on creating a federal tax authority, a draft law for tax procedures and a draft law for VAT, which included the components agreed on in the GCC draft law. These draft laws are still being studied to ensure their alignment to the country’s specifications and procedures.
  • With regards to corporate tax law, the Ministry conducted a number of studies on the effects of imposing taxes in the UAE and presented it to relevant authorities. The draft law is still under study with regards to the tax rate to be imposed. The developments on the draft law on corporate tax will be announced once completed to allow concerned entities a time limit of no less than a year to fully prepare for the implementation and fulfillment of their tax obligations- after the approval and issuance of the law

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