By: Amr Adel
Abu Dhabi – Mubasher: The director general of the UAE’s Federal Tax Authority on Tuesday said he expects the value-added tax (VAT) and selective tax law to be issued sometime in the third quarter of 2017.
Speaking at a press conference at the Ministry of Finance’s (MoF) headquarters, Khalid Al Bustani said that the anticipated social impact of the VAT on consumers will be 1.4%.
Only 250 companies will be subject to the selective tax, he added.
The VAT is an indirect tax paid by the consumer and is imposed on a product at any time value is added at a stage of production and at the final sale, whereas the selective tax is imposed on products that harm people’s health including tobacco products and soft and energy drinks.
All companies operating in the UAE will be registered under the new tax system by the end of the year, Al Bustani revealed, noting that around 300,000 to 350,000 companies are set to be registered.
The new tax measures will not affect the UAE’s position or competitiveness as these taxes are amongst the lowest worldwide, the Federal Tax Authority’s top official highlighted.
He explained that taxes were an important means for diversifying government revenue sources, developing the economy and contributing to upgrading the country’s infrastructure and services for citizens and expatriates alike.
Speaking about the registration process, Al Bustani revealed that the Federal Tax Authority was looking to make all relevant sectors ready for the two taxes.
The authority is working on registering companies based on the size of their business, with large businesses at the forefront alongside firms, which produce products that will be subject to the selective tax, he added.
In February, the UAE announced that it would begin implementing the VAT at 5% starting 1 January 2018, while the selective tax was set to come into force in Q4-17.
Translated by: Nada Adel Sobhi
