Taxes in The United Arab Emirates

1. Taxes in The United Arab Emirates UAE has maintained a tax-friendly environment in the Nation. It does not charge huge taxes on business as compared to other nations. Many business firms have taken advantage of this and have prospered a lot. There are very few taxes prevalent in the UAE. ❖Types of taxes that UAE impose on the businesses in the UAE Following are the type of taxes that UAE impose on the companies in the UAE. 1.Value Added Tax The Value Added Tax or VAT started on January 1, 2018, in UAE. The VAT is a tax charged on the amount of a product at each point of sales in the supply chain. It is different from the sales tax. In the UAE, the standard rate of Value Added Tax is 5%. However, the specific supply of goods, services is 0% rated; few supplies excluded. Business can claim the VAT paid on business expenses, purchase concerning taxable supplies. There are some VAT Consultants who can help businesses regarding the Value Added Tax. 2.Excise Tax The excise tax started in UAE on October 1, 2017. The excise tax is charged on products such as alcohol, tobacco, confectionery, soft drinks, and fast food that are unhealthy for people in the UAE. The excise tax imposed on both the producer and the consumer, but it varies from product to product. The discriminating factor between VAT and excise is that excise is levied only on certain products. Excise tax for soft drinks is 50%, for tobacco is 100%, for energy drinks is 100%. 3.Corporate Tax The corporate tax is the tax imposed on corporates. The corporate tax levied on oil companies and foreign banks only in the UAE. Companies registered in the free zones excluded from

2. corporate tax for a specific time, and such time increased. Some rules and regulations of independent free zones are applied. 4.Double Taxation The UAE has made 94 agreements with other countries to avoid double taxation on overseas investments. The Double Taxation avoidance agreement avoids double taxation along with additional indirect taxes and tax evasion. It eliminates any hurdles related to foreign trade and investment flows. 5.Tourism Taxes The tourists in the UAE charged with some tourism taxes from restaurants, hotels, spas, resorts. The Tourism Taxes for room rate is 10%, service charge is 10%, Municipality fees is 10%, the city tax is 6-10%, tourism fee is 6%. 6.Income Tax Income tax is the tax imposed directly on personal income. No income tax levied on an individual’s revenue in the UAE. 7.Customs Duty Tax The Customs Duty Tax imposed on the import and export of some goods and services. The rate of customs duty tax in UAE is 5%. The customs duty tax calculated on Cost, Insurance, and Freight or CIF value for most of the items. Custom duty tax for alcohol is 50% and for a cigarette is 100%. ❖Conclusion: The above seven taxes are the taxes that are imposed by the United Arab Government upon the business running their firms in UAE. Alkhadim LLC is an expert VAT consultant that provides accounting services, human resources, and administrative services along with VAT consultancy.