VAT Attack? Should I Be Concerned?

The six member states that comprise the GCC have become the latest to join a host of countries that have introduced VAT since it was first established in France just over 60 years ago.  The UAE will see it formally becoming a part of its system as of 1 January 2018.  To date, the issuance of the Federal Decree-Law No. (8) of 2017 has provided some high-level guidance as to how relevant entities and people can expect the 5% transaction tax to operate.

Just as with VAT in Europe, the UAE Law provides for two rates of tax: the standard rate at 5% and the zero-rate.  It also identifies four exemptions from VAT: certain financial services; the supply of certain residential buildings; the supply of bare land; and, commuters will be happy to know, the supply of local passenger transport.  It is hoped that the Executive Regulations, due to be issued later this year, will flesh out some of the detail with regards to a number of aspects in the law.