Weekly Spotlight: Tax developments in the UAE

This week the spotlight is on tax developments in the UAE, where the country’s President has issued the excise tax law covering the taxation of tobacco, fizzy and energy drinks. It will be published in the Official Gazette and come into force on 1 October 2017. Excise tax at 100% will be levied on tobacco and energy drinks and 50% on fizzy drinks (excluding carbonated water) under Federal Decree-Law No. 7/2017. The regulations to the Law will come into force by December 2017. The law details the tax’s general rules and procedures. Article 16 of the law says some products liable for excise which are used in the manufacturing process for other goods also subject to excise taxes could get special discounts. More details will be given in the regulations to the law. Under the law products liable for duty which are exported could be exempted from duty, or be liable for a discounted rate.

Elsewhere, according to local newspaper reports, the UAE’s Federal Tax Authority has announced schools and nurseries will be zero-rated for VAT purposes. The Authority added schools and nurseries should therefore not increase their fees next year. Being zero-rated allows companies and institutions to reclaim VAT paid on business costs and services.

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