15 August 2017 (Correction: To amend Khalid Ali Al Bustani's quote to confirm he said Saudi Arabia AND the UAE will introduce VAT in January, with the other GCC countries following in due course afterwards.)
Companies in the United Arab Emirates (UAE) will be able to begin registering for value-added tax (VAT) from the middle of next month, a government official said on Tuesday.
Speaking at a press conference in Abu Dhabi, the director-general of the Federal Tax Authority, Khalid Ali Al Bustani, said companies will be able to register for VAT through the authority's own website from mid-September.
Around 300,000-350,000 companies in the UAE will be affected when VAT is implemented from January 2018, with no grace period, Al Bustani said. Firms will be expected to file VAT returns on a quarterly basis, but also have the option to pay in monthly installments if they prefer.
Larger companies will be targeted during the first phase of registration, both for VAT and for excise tax, which will initially be introduced in the UAE and Saudi Arabia, with other GCC states set to follow throughout the course of 2018, Al Bustani said.
"We at the GCC agreed that we all will implement the VAT,” Al Bustani said. “We are starting with Saudi Arabia and the UAE in January and the rest could implement until the end of 2018," he added.
The regulatory framework governing VAT and excise duty in the UAE will be introduced during the fourth quarter of 2017, he said, but no date was confirmed.
A levy of 5 percent of the value of purchases is being imposed as VAT on certain goods and services. VAT is likely to apply only to companies whose annual revenues exceed around $100,000 a year, a source at the ministry recently told Zawya.
Earlier this month, a new decree
approving a tax procedures law was published on the finance ministry's website.
"The Law, issued by H.H. Sheikh Khalifa bin Zayed Al Nahyan, is an all-encompassing legislative framework that lays the groundwork for the UAE's plan to implement taxes as a means to ensure sustainability and diversify the government's revenue streams," Sheikh Hamdan bin Rashid Al Maktoum, deputy ruler of Dubai, Minister of Finance and chairman of the Federal Tax Authority, was quoted as saying in a press statement.
The introduction of VAT is expected to result in inflation increasing by 1.4 percent, Al Bustani said.
For more on the introduction of VAT in the GCC, see our special coverage
© Zawya 2017