President His Highness Sheikh Khalifa bin Zayed Al Nahyan has issued the Federal Decree-Law No. 8 of 2017 for Value-Added Tax (VAT), with one of the lowest rates in the world.
A preliminary step to implementing VAT in the UAE as of January 2018, the 5% tax is set 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.
"The Federal Decree-Law issued by H.H. Sheikh Khalifa bin Zayed is the bedrock of the UAE’s planned tax system, which was designed to meet the most stringent of standards and best practices," said H.H. Sheikh Hamdan bin Rashid Al Maktoum, Deputy Ruler of Dubai, UAE Minister of Finance and Chairman of the Federal Tax Authority.
"The Value-Added Tax, which is set to be implemented across all GCC countries over the next two years, will bring a new revenue stream for the national economy and GDP. This, in turn, will ensure consistency in the high quality of government services, to mirror the UAE’s advanced position on several global competitiveness indexes."
"The new tax system will provide extra support for the Government to implement the vision of the UAE leadership and build a diversified and productive knowledge economy," H.H. Sheikh Hamdan added.
Gold, other precious metals, taxis and the metro will not be taxed either.
Estimates suggest VAT is expected to generate Dhs12bn in revenue in the first year.