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Introduction to VAT in UAE

With each passing day, we are moving one step closer to the implementation of VAT in UAE. VAT in UAE is a general consumption tax which will be levied on the majority of transactions of goods and services unless specifically exempted by the Law. Under this, VAT is charged at every stage of 'Value Addition' in the supply chain and the mechanism of Input tax deduction ensures that the businesses act as tax agents or tax collectors of the government, who collect the tax from the end consumers, account and pay the tax. Ultimately, the end consumer pays the tax.

The government authorities are working in full swing to implement VAT in UAE and following are the key milestones achieved in the process of implementing UAE VAT Law:

1. Draft UAE VAT Law was made available in MOF

2. Federal Law on tax procedures was released

3. VAT Decree Law was released

4. Online VAT Registration is opened in FTA portal

Finalization of UAE executive regulation will be the next big task in the process of implementing VAT in UAE.

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