Built to inform

Sign up for the daily newsletters

No, Thank you

UAE President approves VAT law as sectors prepare

The UAE has approved a law to introduce a 5% Value Added Tax (VAT) set to be implemented on 1 January, 2018

The law's regulatory framework will be released by year-end.
The law's regulatory framework will be released by year-end.

The UAE has approved a law to introduce a 5% Value Added Tax (VAT), set to be implemented on 1 January, 2018.

President of the UAE HH Sheikh Khalifa bin Zayed Al Nahyan officially signed the Federal Decree-Law Number 8 of 2017, which will set the general rules for the implementation of the new tax and includes details on the goods and services subjected to VAT, as well as those exempted, according to WAM

The law’s regulatory framework, which was signed earlier this year, will reveal more details of the law when it is released by the fourth quarter of the year.

READ: VAT registration to begin mid-September in the UAE

In an official statement, Sheikh Hamdan bin Rashid Al Maktoum, Deputy Ruler of Dubai, UAE Minister of Finance and Chairman of the Federal Tax Authority, said: "The Federal Decree-Law issued by His Highness Sheikh Khalifa bin Zayed Al Nahyan is the bedrock of the UAE's planned tax system, which was designed to meet the most stringent of standards and best practices.

"The Value Added Tax, which is set to be implemented across all GCC countries over the next two years, will bring a new revenue stream for the national economy and GDP. This, in turn, will ensure consistency in the high quality of government services, to mirror the UAE's advanced position on several global competitiveness indexes.

READ: How will VAT affect the GCC’s construction sector?

"The new tax system will provide extra support for the Government to implement the vision of the UAE leadership and build a diversified and productive knowledge economy," he added.

The law will also outline a list of exclusions to the tax, including housing exemptions and a 0% rate on education, according to local UAE media outlets.

For the construction and property development sectors, VAT will impact the contract price in construction contracts as well as construction material costs, resulting in an uptick in overall pricing.

Residential property and bare land will be exempt from the tax, but commercial real estate will be standard rated, or fully subject to the 5% tax.

Most popular

Awards

Construction industry conversations around digitisation must evolve
The Middle East construction industry’s approach to tech must evolve and focus on how can

Conferences

CW In Focus | Inside the Leaders in KSA Awards 2019 in Riyadh
Meet the winners in all 10 categories and learn more about Vision 2030 in this
CW In Focus | Leaders in Construction Summit UAE 2019
A roundup of Construction Week's annual summit that was held in Dubai this September

Latest Issue

Construction Week - Issue 754
Nov 23, 2019