VAT and excise duty are the two taxes that apply to goods and services in the United Arab Emirates.
VAT
The UAE has a 5% VAT rate. But some things are exempt from the VAT. Some personal protective equipment used during the COVID-19 pandemic was exempt in the UAE in 2020, including textile and medical masks, single-use gloves, chemical disinfectants, and antiseptics. Other products and services with 0% VAT rates are as follows:
- Services, products, and exports outside the GCC.
- Transportation across borders.
- Superior precious metals for investment.
- Homes that have recently been built.
- A few healthcare and education services.
Excise duty
Beginning in January 2017, the UAE adopted an excise duty. This is an indirect tax imposed on products that the government deems to be hazardous to the environment or human health. Goods to which the tax applies are:
50% off cola beverages (except for unflavored carbonated water). The same might be true of things that can serve as the foundation for fizzy beverages.
100% on stimulant-containing energy beverages including caffeine, taurine, ginseng, and guarana. It might also apply to substances that can be used to make energy drinks.
100% on all items specified in Schedule 24 of the GCC Common Customs Tariff, including tobacco and tobacco products.
VAT refunds in the UAE
VAT is paid at the time of sale by locals, expats, and tourists alike. Since November 2018, travelers who qualify can ask for refunds on items they bought with VAT. These prerequisites must be met to do so:
A merchant taking part in the duty refund for tourists scheme must be used to purchase the goods.
- The federal tax authority’s refund scheme does not exclude goods.
- Within 90 days of the supply and the acquisitions, they must aim to depart the USE.
- Within three months after delivery, they must export the products from the UAE.
- The Federal Tax authority’s standards must be followed during the process of purchasing and exporting commodities.
At airports, seaports, and border ports, there is a specific machine that tourists can use to get their reimbursements. The gadgets allow customers to electronically submit duty invoices for transactions they made from participating retailers, along with copies of their credit cards and passports.
Foreigners’ tax system in the UAE
Regardless of residency status, there is no income duty in the UAE for individuals who work there. However, depending on their home country’s duty regulations, persons who are not UAE tax residents may still be required to pay income tax there.
UAE wealth and property taxes Capital gains tax
Unless they are derived from sales of a company that is required to pay income duty or banking tax, capital gains are generally exempt from taxation.
Transfer duty
There is a transfer fee associated with the transfer of property. This varies per Emirate; in Dubai, it is 4%, for instance. Although the buyer and seller both share the burden of this, the buyer generally pays the transfer fee.
Rental and municipal taxes
Taxes on rental properties vary amongst the Emirates, as was already mentioned. In Dubai, the rental tax for residential tenants is 5% of the annual rent, whereas the rental tax for commercial tenants is 10%. In contrast, expats in Abu Dhabi must pay 3% in property taxes while UAE citizens are not. Similarly to this, Sharjah charges a 2% rental tax to every tenant.
UAE import and export taxes Customs fees
Customs fees are typically determined at 5% of an item’s Cost, Insurance, and Freight (CIF) value. Alcohol is subject to a 50% tariff while tobacco items are subject to a 100% customs duty. Some categories are exempt.
Additionally, there is a 5% VAT on gasoline.
Advice about taxes in the UAE
Many people do not need to engage an accountant because there is no income duty form to complete. It is nevertheless crucial for those who run larger firms to get impartial financial advice regarding their tax obligations.
