The President of the United Arab Emirates, Shaikh Khalifa Bin Zayed Al Nahyan, issued Federal Decree-Law No. 8 of 2017 for Value-Added Tax (VAT) on August 28, 2017. This is a primary step for implementing VAT in the UAE as of January 2018.
The Decree-Law provides that all supplies of goods and services are subject to VAT at a standard rate of 5% with the exception of specific supplies subject to the zero rate and items exempted as specified in the Decree-law. Tax imposed shall be the responsibility of a Taxable Person who makes taxable supplies, deemed supplies or pays VAT on imports. A Zero rate applies when goods and services are being exported to a country outside the VAT-implementing Gulf Cooperation Council (GCC) states, as well as for international transportation of passengers or goods including a journey starting or ending in the UAE or passing through its territory. Supplies of crude oil and natural gas shall be subject to tax at the rate of zero.
Every person who has a place of residence in the UAE or in a VAT implementing GCC state must register for VAT according to the Decree-Law, if at the end of any month his taxable supplies for the previous 12 months exceeded the mandatory registration threshold or are expected to exceed the mandatory registration threshold in the next 30 days.
