Value added tax introduced in the United Arab Emirates
On the 1st of January 2018, the United Arab Emirates implemented a 5% VAT on a majority of goods and services.
The enforcement of such complex tax in a country that had no need to diversify its sources of income is not problem-free.
Indeed, its efficiency relies on a clear understanding of the concepts underlying VAT (fractioned payments, fiscal neutrality) as well as a proper training of the tax collectors concerning the requirements to collect VAT (accountancy, storage of companies’ invoices etc.)
From now on, local businesses whose turnover exceeds 375.000 riyals (US$100 000) must register for VAT. Non-resident company must also register, disregarding their turnover threshold.
This VAT may not be neutral concerning certain services such as touristic services, which would not be refundable in case of domestic consumption. Other services, like international transports, may be exempt from the 5% levy.
