Dubai – 14 January: Following our previous alerts on UAE tax developments, recent media reports and announcements by Ministry of Finance officials are clarifying when value added tax (VAT) is likely to be introduced in the UAE and across the Gulf Cooperation Council (GCC) region. It appears unlikely that VAT will be implemented before 2018 as the UAE has already announced it will need two years to adopt a new tax regime. GCC countries (Saudi Arabia, Kuwait, Oman, Qatar and Bahrain as well as the UAE) are yet to finalize their implementation policy, but a tentative plan for the tax implementation has already been approved. The rate, as we have previously suggested, is likely to be between 3% and 5% of the value of the goods.
The UAE’s Ministry of Finance has suggested that VAT will probably not be applied to education, healthcare and social services – or to 94 food staples. Ministry of Finance sources have also suggested that introducing VAT is likely to generate revenue of up to AED10 billion during its first year of application (likely to be 2018). We will continue to keep you updated on any further developments. In the meantime, if you would like to discuss how your business might be affected by these changes, or if you have any other questions, please do not hesitate to contact your regular KPMG tax advisor.
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