NAFL 4th Issue Low Res

Cover Story
NAFL REVIEW
money levied will be used to launch new
developmental projects.
The Ministry of Finance said VAT will provide
the government necessary funds to continue
providing quality public service to both
residents and expatriates who live in the
UAE.
“The UAE Federal and Emirate governments
provide citizens and residents with many
different public services – including
hospitals, roads, public schools, parks,
waste control, and police services. These
services are paid for from the government
budgets,” the ministry stated on its website
dedicated for VAT.
“VAT will provide our country with a new
source of income which will contribute to the
continued provision of high quality public
services into the future. It will also help
government move towards its vision of
reducing dependence on oil and other
hydrocarbons as a source of revenue,” it
added.
Rashid Al Blooshi, CEO of Abu Dhabi
Securities Exchange, ADX, was quoted as
saying in the Emirates State News Agency
WAM: “The proposed five percent VAT will be
applied to consumption and not on savings
or investments. It will not have a significant
impact on businesses and financial
markets.”
The 5 percent UAE VAT is the same as in
Japan, the lowest in the world. European
countries have the highest VAT rates.
The UAE government mandates all
businesses to submit tax declaration
statements on a quarterly basis after the VAT
law took effect next year.
The Ministry of Finance said companies
concerned can file their declaration
statements electronically after responding
to all the questions raised on its website.
Mandatory registration is mandatory for
companies with taxable goods of
Dh375,000. Compulsory registration begins
on the fourth quarter of 2017.
In May, H.H. Sheikh Hamdan bin Rashid Al
What is VAT?
Value Added Tax (or VAT) is an indirect tax. Occasionally you
might also see it referred to as a type of general
consumption tax. In a country which has a VAT, it is imposed
on most supplies of goods and services that are bought and
sold.
VAT is one of the most common types of consumption tax
found around the world. Over 150 countries have
implemented VAT (or its equivalent, Goods and Services
Tax), including all 29 European Union (EU) members,
Canada, New Zealand, Australia, Singapore and Malaysia.
VAT is charged at each step of the 'supply chain'. Ultimate
consumers generally bear the VAT cost while Businesses
collect and account for the tax, in a way acting as a tax
collector on behalf of the government.
Maktoum, Deputy Ruler of Dubai and UAE
Minister of Finance, headed the first meeting
of the Federal Tax Authority, FTA and Board of
Directors, at the Ministry of Finance.
During their meeting, it was stressed that
VAT will be levied on the sale of all goods and
services unless they are subject to a zero
rate or tax exemption such as food,
commercial property, hotel services, etc. VAT
will either be the basic 5 percent tax or zerorate
tax, which is tax-free.
Tax expert Markos Brotzakis, left,
with NAFL President Nadia Abdul Aziz
Businesses will be able to recover VAT on the
purchase of goods and services used for
business purposes. Businesses exempt
from VAT will not be able to recover the tax
incurred on the cost of a good or service that
is not exempt.
Zero-rated supplies include local
transportation, imports and exports, majority
of healthcare and education services,
investment gold, and sales and leasing of
residential properties. Some financial
services, residential buildings, and vacant
land will also be exempted.
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