UAE To Put 100% Tax On Fizzy Drinks And Tobacco

So the VAT invades the UAE, slowly it’s arriving one by one. The first one’s to bite our pocket is tobacco & sugary drinks. It’s about time noh? Oh Sugary drinks! (free diabetes, heart disease and obesity)
The Federal Tax Authority (FTA) announced a selective tax of 100 per cent on tobacco and energy drinks, while 50 percent on carbonated beverages that will be imposed in the fourth quarter of this year.
But the biggest highlight of these is on January 1, 2018 where they will impose 5% VAT.
 
aed.jpg
The following are the VAT rates:
Exempt:
  • Residential Property Old
  • Foodstuff
Standard Rate: The standard rate is 5%
  • Jewelry
  • Second hand cars – margin scheme
  • Financial services – standard rate on Fee income. Margin based income is exempt. Islamic banking products to be treated same as equivalent conventional products.
  • Insurance premium except Life insurance is taxable.
Goods & Services:
  • Goods – Place of supply rules apply. Where goods are physically present when sold.
  • Goods for export will be zero rated. Export has to be done within 3 months and BL/ documentary evidence required.
  • Import of goods – no VAT but Reverse Charge applies. Has to be accounted for on the VAT return.
  • Import & transshipment to other GCC countries – Pay VAT and UAE will transfer it to the other GCC country.
  • Services – based on where the Business is based. Alternatively, a Consumption based rule will apply. E.g. telecom or software services will be taxed where services and used and enjoyed.
Zero Rate:
  • Education
  • Healthcare
  • Residential Property New (after Jan 1 2018)
  • Investment & Precious Metals (bullion)
  • Local Transport – mix rates
Standard Rate: The standard rate is 5%
  • Jewelry
  • Second hand cars – margin scheme
  • Financial services – standard rate on Fee income. Margin based income is exempt. Islamic banking products to be treated same as equivalent conventional products.
  • Insurance premium except Life insurance is taxable.
Goods & Services:
  • Goods – Place of supply rules apply. Where goods are physically present when sold.
  • Goods for export will be zero rated. Export has to be done within 3 months and BL/ documentary evidence required.
  • Import of goods – no VAT but Reverse Charge applies. Has to be accounted for on the VAT return.
  • Import & transshipment to other GCC countries – Pay VAT and UAE will transfer it to the other GCC country.
  • Services – based on where the Business is based. Alternatively, a Consumption based rule will apply. E.g. telecom or software services will be taxed where services and used and enjoyed.
VAT Returns:
  • The return will include only summary data of purchases and sales, Input & Output tax and which Emirate the sale has been done.
  • Returns will be quarterly and must be filed and tax paid within 28 days of quarter end.
  • All returns and tax payment will be fully electronic.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s