VAT is coming to the UAE next January
We've known for a while that VAT (Value Added Tax) is coming to the UAE in 2018, but now it seems that the date is fast approaching. According to reports VAT will be introduced at the beginning January 2018 - just over 10 months away.
Speaking to Reuters and Zawya on Sunday, Under Secretary of the UAE Ministry of Finance, Younis Al Khouri, confirmed the nation’s plans to introduce a five percent VAT across the GCC.
“By 2018, January 1, we are aiming to adopt five percent VAT across the GCC”, he said.
The VAT plan is to be rolled out across all six GCC countries (UAE, Saudi Arabia, Kuwait, Qatar, Bahrain and Oman) at the same time.
So how is this all going to happen? To begin with, the UAE government is going to ask all companies making over $100k a year (AED367k) to register for the tax. It looks like everyone will be slapped with a 5 percent tax – meaning the prices of goods and services will go up by this much. If, for example, you were paying AED300 a for pair of new trainers, if they are part of the new VAT set up, those trainers will cost you AED315 from January 2018. This is pretty common in many countries across the world, where everything you buy usually then has added tax.
It is possible some sectors such as education and healthcare will get special treatment, but the government is planning the 5 per cent rate pretty much across the board.
Why you may ask? VAT, which could bring in around AED12billion in its first year.
If you’re worried about this… in the UK, the rate of VAT is a whopping 20 per cent.