Team shortlist28 Sep 2017 AT 09:19 AM

UAE Excise Tax to come into effect this Sunday

Energy drinks are about to get a lot more expensive
Team shortlist28 Sep 2017 AT 09:19 AM
UAE Excise Tax to come into effect this Sunday
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If you’ve been looking to cut down on the amount of fizzy and energy drinks you’ve been consuming, the new Excise Tax might just speed up your health-kick.

Set to come in to effect on Sunday, October 1, the tax will see the prices of energy drinks increase by 100 percent, fizzy drinks by 50 percent and all tobacco products by 100 percent.

Speaking on the news, the director-general of the Federal Tax Authority (FTA) Khalid Ali Al Bustani said: “With the launch of the excise tax, we celebrate a new milestone in our journey to achieve the visions of our wise leaders for the future of the UAE and to implement the directives of the UAE Government, which has called on all government and private institutions to develop advanced forward-looking services in order to meet the needs of all segments of society, and propel the UAE to the highest ranks on global competitiveness indicators.”

He added that the authority has launched an awareness campaign that will organise workshops for UAE-based companies to help them identify all tax procedures and mechanisms for registration. The organisation will also help answer any questions that people may have about the Value Added Tax which will be implemented across the UAE on January 1, 2018. It will also have a special section dedicated to Excise Tax.

This comes shortly before VAT will be introduced. The news of the 5 percent VAT was confirmed earlier this year by the Under Secretary of the UAE Ministry of Finance, Younis Al Khouri, who stated that from January 1, 2018, all GCC countries will be enforcing a 5 percent VAT across the board.

In a bid to soften the blow, the UAE announced that it will most likely be enforcing a waiver on around 100 goods and services, such as certain food and healthcare. The cost of preschool and school, as well as government owned or government funded higher education facilities will be unaffected by the introduction of VAT.

All goods exported out of the GCC will be zero rated, while investments in gold, silver and metals with 99 percent purity will also be subject to a zero VAT rate.

There’s also good news for residential property hunters as both rental and sales will be generally exempted from VAT.

With regards to transport, it seems that the price won’t be going up anytime soon. All local passenger transport such as taxis and metro services will be exempt, while international flights from the UAE as well as international air passenger transfers through the UAE will be zero rated.

While businesses with annual revenues of over AED375,000 will be obliged to register for the GCC VAT system, there will be no income tax on salaries.

In an attempt to help all UAE businesses adapt to VAT, the UAE’s Federal Tax Authority (FTA) has launched a new website, www.tax.gov.ae.

Aside from assistance and guidance, the website will provide online training sessions that will be conducted by the FTA for businesses across the UAE. Business owners will also be able to pre-register their companies for excise tax and VAT on the website from the middle of September.

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