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The UAE federal tax system is administered by the Federal Tax Authority (FTA), which was founded ahead of the 2018 implementation of a federal value added tax (VAT). The current standard VAT rate in the country is 5%. [2] [3] In January 2022, the UAE Ministry of Finance announced the implementation of a federal corporate tax starting June 2023. [4]
The United Arab Emirates (UAE) on 1 January 2018 implemented VAT. For companies whose annual revenues exceed $102,000 (Dhs 375,000), registration is mandatory. GCC countries agreed to an introductory rate of 5%. [54] [55] [56] Saudi Arabia's VAT system uses a 15% rate. [57]
Economic overview. UAE has the second-largest economy in the Arab world (after Saudi Arabia), [ 22 ] with a gross domestic product (GDP) of US$414 billion (AED 1.52 trillion) in 2018. [ 23 ] A third of the GDP is from oil revenues. [ 22 ] The economy was expected to grow 4–4.5% in 2013, compared to 2.3–3.5% over the previous five years.
As of Q1 2018, 12,362 companies operated out of AFZA. [1] The UAE's free trade zones are a major economic contributor, with 2017 exports from UAE free zones of Dhs 225.5 billion in 2017 representing some 19.5% of total exports. Of a total of 45 free zones in the UAE, 30 are located in Dubai.
The UAE government implemented value-added tax (VAT) in the country from January 1, 2018, at a standard rate of 5%. [241] While the government may still adjust the exact arrangement of the VAT, it is not likely that any new taxes will be introduced in the foreseeable future.
In 2018, the UAE rolled back the 5% value added tax (VAT) for wholesale diamond investors. [68] [69] [70] The diamond trading takes on an exchange managed by the Dubai Multi Commodities Centre, with many of the industry participants housed in office space in the Almas Tower in the JLT business cluster. [71]
The UAE has a number of free zones across Dubai, [1] Abu Dhabi, Sharjah, Fujairah, Ajman, Ras al-Khaimah and Umm al-Quwain. Free zones may be broadly categorized as seaport free zones, airport free zones, and mainland free zones. Free-trade zone exemptions are: [2] 100% foreign ownership of the enterprise. 100% import and export tax exemptions.
As of January 2016, Saudi Arabia and the United Arab Emirates announced the plan to implement value-added tax (VAT) in the GCC as a response to the decrease in oil prices beginning in 2014. VAT is expected to be effective in the GCC in January 2018, however some countries may implement this tax later into the year.