All you need to know about the UAE’s new VAT law

Burj Dubai, the world's tallest building, seen at centre left, in Dubai, United Arab Emirates, Sunday, Jan. 3, 2010. (File photo: AP)

The United Arab Emirates will implement VAT at the rate of five percent in January 2018. Al Tamimi & Co Advocates & Legal Consultants partner and head of equity capital Ahmad Ibrahim explained details of the VAT in an interview with Al Arabiya.

Ibrahim outlined which sectors will be subject to VAT as well as exemptions:

1. The real estate and rental sector: Rental and sale of residential units in the secondary market are exempt from VAT

2. Electricity and water services: They will be subject to VAT

3. Money transactions: The transferred money is exempt from VAT but the transaction fees will be subject to VAT

4. Bank loans: Loan interests will be exempt from VAT while the fees will be subject to VAT

5. Diesel and petrol: They will be exempt from VAT

6. Used cars: Car showrooms for used cars will be subject to VAT tax but not the customer

7. Car maintenance: This will be subject to VAT

8. Local transportation and taxis: This will not be subject to VAT

9 Air tickets: They will not be subject to VAT

10. Most food products: They will be subject to VAT

11. Rice and wheat: It is so far unclear as the Executive Regulation will clarify this when it’s issued

12. Healthcare sector: Details regarding medical services which will be subject to VAT are not clear yet but it’s believed that the cosmetics and plastic surgery fields will be subject to VAT

13. Educational sector: Although it is not clear yet if the non-governmental secondary education will be subject to the VAT or not, Ibrahim thinks that since governmental secondary education is part of basic education, it will be subject to zero percent tax. However, this will be clarified when the law’s Executive Regulation is issued. As for university education, the governmental universities will not be subject to VAT while private universities will be subject to VAT.

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Last Update: Wednesday, 20 May 2020 KSA 09:50 - GMT 06:50
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