What you need to know about VAT in the UAE | KPMG | AE

What you need to know about VAT in the UAE

What you need to know about VAT in the UAE

VAT is likely to significantly affect nearly every UAE business in some way – and a 1 January 2018 start date leaves only a short window for businesses to prepare for VAT. Will you be ready?

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VAT in the UAE

All six of the GCC members (Saudi Arabia, Qatar, Oman, Kuwait, the UAE and Bahrain) have now agreed the GCC's unified VAT framework. While the framework only sets out key VAT principles, it clears the way - once ratified - for each GCC member to release a national VAT law based on those principles.

The UAE’s Ministry of Finance has confirmed its intention to implement VAT with effect from 1 January 2018 and has recently initiated a series of open workshops to brief businesses on VAT issues. According to recent reports, the national VAT law is currently being reviewed by the Executive Council and should be released in a few months. It is likely to be accompanied by a taxation procedures law and followed by executive regulations. While the law has yet to be made publicly available, some proposed details of the UAE’s VAT law have been shared during the VAT workshops, in particular:
 

  • The VAT rate is confirmed at five percent with a zero rate for some supplies. 
  • The compulsory registration threshold will be based on an annual turnover of AED375,000 – revenue above AED187,500 is required to register voluntarily. The VAT registration portal should open by 1 October 2017
  • Tax periods for filing VAT returns are likely to be quarterly
  • Filing and payments will probably be done electronically
  • The healthcare and education sectors are surprisingly zero-rated - they were previously expected to be treated as exempt
  • Special rules will apply to the real estate sector – although we believe the first sale of residential property will be zero rated
  • Special treatments and rules for the financial sector and free trade zones are still to be clarified - the Ministry of Finance has suggested further instructions will follow
  • Special rules are expected to apply to intra –GCC trade in goods

 

VAT is likely to significantly affect nearly every UAE business in some way – and a 1 January 2018 start date leaves only a short window for businesses to prepare for VAT. Will you be ready?


How KPMG can help

We have an experienced VAT team, part of a global network of VAT experts, who have been advising clients on implementation strategies, helping them comply with VAT obligations and explaining their VAT liabilities. They focus on:

  • IT and VAT impact assessments 
  • Implementation strategies 
  • IT testing
  • In-house training for employees 
  • VAT manuals 
  • Registration advice
  • Guidance on VAT submissions - including reports and reviews

To ensure your organization is prepared for VAT, please contact Clare McColl and Rob Dalla Costa


 

© 2017 KPMG Lower Gulf Limited, registered in the UAE and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. Printed in the United Arab Emirates. The KPMG name, logo and “cutting through complexity” are registered trademarks or trademarks of KPMG International.

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