5% VAT to be Introduced on Electricity, Water and Food in the UAE…

The Federal Tax Authority has just released more details on VAT in the UAE. Here’s what you should know…

When will VAT in the UAE be introduced in the UAE

VAT will be introduced across the UAE on 1 January 2018 at a standard rate of 5%. See the Ministry of Finance website for more info. In October, the UAE introduced an excise tax on energy drinks, tobacco and sugary drinks.

We now know that it will affect things like water and electricity consumption, petrol, clothes, electronics and even food. What has emerged is that anything not listed as exempt or zero rated will be subjected to VAT at the standard rate. We will continue updating you as more information emerges.

Why is the UAE introducing VAT?

According to the Ministry of Finance: “The UAE Federal and Emirate governments provide citizens and residents with many different public services – including hospitals, roads, public schools, parks, waste control, and police services.

These services are paid for from the government budgets. VAT will provide our country with a new source of income which will contribute to the continued provision of high quality public services into the future. It will also help government move towards its vision of reducing dependence on oil and other hydrocarbons as a source of revenue.”