The United Arab Emirates is introducing a value added tax (VAT) system with effect from 1 January 2018. It will be at a rate of 5%, and there will be a number of exemptions from the tax for education, healthcare and foodstuffs.
Also, once a framework agreement on the implementation of VAT is reached, then the Gulf Cooperation Council countries are expected to also introduce VAT in 2018. The full practical implications of this need to be worked through for the businesses in the region, who will be required to collect and pay over this VAT to the local fiscal authorities. Businesses will also need time to prepare their accounting systems, budgets and processes for both charging and collecting the tax, and ensuring that they fully comply with the rules.