THE UAE WILL DOUBLE EXCISE TAX ON TOBACCO AND.... FROM OCTOBER OCTOBER 1, 2017
The UAE Cabinet on Wednesday approved executive regulations for the upcoming excise tax and VAT ahead of their implementation as part of a GCC-wide agreement.
His Highness Sheikh Mohammed bin Rashid Al Maktoum, Vice-President and Prime Minister of the UAE and Ruler of Dubai, chaired the cabinet meeting on Wednesday where it approved a number of other regulations as well.
The UAE will double excise tax on tobacco and energy drinks and 50 per cent on soft drinks starting from October 1, 2017.
However, value-added tax will come into force in the UAE from January 1, 2017, on a range of goods and services. The five per cent tax is set to be imposed on the import and supply of goods and services at each stage of production and distribution, including what is deemed to be a supply. Some of the key sectors have been exempted while others are subjected to either zero-rated or five per cent tax.
VAT WILL HELP SMESs GET BANK CREDIT EASIER
Obtaining credit facility from the banks will become easier for the small and medium enterprises in the UAE after the implementation of VAT as the companies will have to maintain their books from next year.
Pankaj Mundra, Chairman of the Institute of Chartered Accountants of India - UAE (Dubai) Chapter, says the major challenges for SMEs is that they have to maintain their books properly and regularly in order to be VAT-compliant.
"A lot of SMEs will be benefiting from the VAT who never thought of going to banks for credit facilities for expansion or in tough times when you need bank support. Because the companies will keep their books clean, therefore, when there are tough times the book will be ready and they can obtain credit easily. Now people come to us but when we ask for books, they say we don't have them. But now they will have to compulsorily maintain them," Mundra noted.
PRESIDENT ANNOUNCES NEW UAE TAX PROCEDURES LAW
The President, His Highness Sheikh Khalifa bin Zayed Al Nahyan, has issued the landmark Federal Law No. 7 of 2017 for Tax Procedures, which sets the foundations for the planned UAE tax system, regulating the administration and collection of taxes and clearly defining the role of the Federal Tax Authority, FTA.
"The Tax Procedures Law is a significant milestone towards establishing the UAE's tax system and diversifying the economy," said Sheikh Hamdan bin Rashid Al Maktoum, Deputy Ruler of Dubai, UAE Minister of Finance and FTA Chairman.
"The Law, issued by The President His Highness 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. The increased resources will enable the Government to maintain the momentum of its development and infrastructure for a better future."