|By Arabian Post Staff| The Ministry of Finance is still in the process of developing the executive regulations of the Value Added Tax, and the rateon on all taxable and exempt goods, exports and services have not yet been finalised.
Younis Haji Al-Khouri, under-secretary in the ministry of finance, said in a statement that the ministry is working to ensure maximum disclosure and transparency before announciung the rates. ,” Al Khouri added. He pointed out that some tax-related information coming out in the media has been wrongly attributed to MoF, but it actually relates to other tax systems in the region, such as that of the Kingdom of Saudi Arabia.
MoF has already announced the executive regulations of Federal Law No.7 on tax procedures and published these in the Official Gazette. UAE President Sheikh Khalifa Bin Zayed Al Nahyanb hads issued VAT law earlier this year as a preliminary step to implementing VAT in the UAE as of January 2018. Thedecree provides that all supplies of goods and services are subject to VAT at a standard rate of 5% with the exception of specific supplies subject to the zero rate and what is exempted as specified in the Decree-law. Tax imposed shall be the responsibility of a Taxable Person who makes taxable supplies or what is deemed to be a supply or on import.
The proposed 5 percent would be one of the lowest rates in the world to be imposed on the import and supply of goods and services at each stage of production and distribution including what is deemed to be a supply.
According to the decree, a supply of goods includes the transfer of ownership of the goods or the right to use them as an owner from one Person to another and an entry into a contract between two parties triggering the transfer of goods at a later time. A supply of service is any supply that is not considered a supply of goods.
It made two exceptions as to what constitutes a supply: the issuance or sale of any Voucher unless the received Consideration exceeds its declared monetary value; and the transfer of whole or an independent part of a Business from a Person to a Taxable Person for the purposes of continuing such business that was transferred.
Zero-rating applies when goods and services are being exported to outside a VAT-implementing GCC state, as well as to international transportation of passengers or goods including a transfer starting or ending in the UAE or passing through its territory. Air transfer of passengers in in the UAE also incurs zero rates if it is considered an “international carriage” .
Zero rating also applies to the supply of air, sea and land means of transport used to transport passengers and goods, as well as the supply of goods and services related to the supply of the means of transport. The supply or import of investment-precious metals, as well as the first supply of residential buildings within three years of its completion, either through sale or lease in whole or in part, is equally subject to a zero-rate. The first supply of buildings specifically designed to be used by charities and buildings converted from non-residential to residential shall also be taxable at the rate of zero, along with supplies of crude oil and natural gas.
