16 August 2017

The United Arab Emirates (UAE) will implement an excise tax at a rate of 100 percent on tobacco and energy drinks and 50 percent on fizzy drinks (excluding carbonated water) starting the fourth quarter of the year.

“The excise tax will be implemented in the fourth quarter of the year,” the director-general of the UAE’s Federal Tax Authority, Khalid Ali Al Bustani, said on Tuesday at a press conference held at the Ministry of Finance in Abu Dhabi.

Saudi Arabia had already imposed an excise tax on tobacco, energy drinks and carbonated drinks starting last June, leading to a surge in the prices.

The UAE’s tax official said the excise tax law will be signed by the government in the third quarter, while its regulations will be released in the following quarter. He also said the law regarding the new value-added tax (VAT) will also be signed in the third quarter and its regulatory framework will be released in the fourth quarter.

Al Bustani had announced in the press conference that businesses in the UAE will be able to start registering for the new VAT from the middle of next month.

All six Gulf Cooperation Council countries had agreed last year to implement a 5 percent VAT as a means to diversify their economy following the steep decline of oil prices in 2014.

Younis Al Khouri, under-secretary at the finance ministry told Zawya in an interview earlier this year that VAT is expected to be implemented simultaneously across the GCC starting January 1, 2018 and that it would apply on companies with annual revenues exceeding $100,000.

However, Al Bustani on Tuesday said that only the UAE and Saudi Arabia will implement VAT in January. "We are starting with Saudi Arabia and the UAE in January and the rest could implement until the end of 2018," he said. Tax experts told Zawya last year that the UAE and Saudi Arabia are most likely to lead the GCC region in the implementation of VAT.

For Zawya’s special coverage on VAT, click here.


© Express 2017