TAX SERVICES

COUNTRY BACKGROUND

 

The United Arab Emirates (“UAE”) is a relatively young country that was established on December 2, 1971. Despite its young age, the UAE has achieved high publicity and international recognition in a fairly quick timeframe thanks to the large infrastructure and tourism initiatives that were implemented by the Emirates comprising the United Arab Emirates.

 

Unsurprisingly, this has attracted an influx of foreigners willing to live and work in the United Arab Emirates to take advantage of the high standard of living and stability.

 

The majority of the expenditures to finance infrastructure and other government spending has been through a mix of oil revenue, savings, and tax revenues.

 

However, with the declining oil prices seen in early 2016, the government of the UAE has been studying ways of diversifying its revenue away from oil and towards more sustainable sources.

 

PRESENT ENVIRONMENT

 

As of April 2016, the following taxes do not exist in the United Arab Emirates:

 

  • Income Taxes
  • Corporate Taxes (Discussions held, but no implementation date yet)
  • Sales Taxes
  • Estate Taxes
  • Wealth Taxes
  • Value-Added Taxes (Expected 1 January 2018)

Despite the general, no taxation nature of the United Arab Emirates, there are several caveats to be aware of, most importantly the VAT implementation in 2018 and other related information, as delineated below.

 

First, most Emirates that comprise the United Arab Emirates actually have statutory laws that stipulate general tax decrees on as much as 50% on “corporate forms”. These laws, however, are currently only enforced on oil and foreign banks, leaving most other companies in other sectors free from corporate tax.

 

Second, there is a 10% municipality tax on services, food, alcohol, and beverages purchased in hotels and other selected entertainment venues. There is also a tax levied on rental income earned by landlords at the rate of 10% for commercial and 5% for residential.

 

Third, there is a GCC-wide custom import duty assessed at a rate of 5%. There are exceptions to this rate depending on the origin of the product and the type of product imported.

 

Fourth, the government charges a 4% transfer tax for the registration of real estate, whether commercial or residential. This was recently increased from the prior level of 2%. The reason cited by the government was to curb speculation in the real estate industry and is paid by the buyer of the real estate.

 

Five, there exists double-taxation treaties with various countries, for which United Arab Emirates free zones offer “Tax Certificates” to local entities for the purpose of evidencing and complying with the arrangement that exists between the United Arab Emirates and the home country. Local entities may also request a Tax Certificate that are issued by the Ministry of Finance of the United Arab Emirates Government.

 

Sixth, the UAE has recently announced its intention to implement a VAT tax regime by 1 January 2018 at 5% on a GCC-wide level.

 

Rest assured, we will stay on top of further developments as they are announced and provide detailed implementation guidance as more information is made available by the United Arab Emirates Government.

 

HOW WE CAN HELP

 

Given the significance of the introduction of a VAT regime in the UAE by 1 January 2018, we have developed a complete service offering in our Tax Department to address the needs of investors, entrepreneurs, households, and businesses seeking to address their compliance with VAT taxes and obtain the latest information for the most efficient structure possible.

 

We can also assist in VAT registration applications, filing of returns, and global tax advisory structuring services.

 

GLOBAL STRUCTURING

 

Whether you need tax filings spread around the world or advice on global transfer pricing, together with our BKR International worldwide member firms we are able to provide clients with cross-border expertise and compliance by leveraging our expertise with member firms around the world to provide clients with the best combination of local knowledge in each jurisdiction of operation, all while having a single local point of contact.

TAX SERVICES

COUNTRY BACKGROUND

 

The United Arab Emirates (“UAE”) is a relatively young country that was established on December 2, 1971. Despite its young age, the UAE has achieved high publicity and international recognition in a fairly quick timeframe thanks to the large infrastructure and tourism initiatives that were implemented by the Emirates comprising the United Arab Emirates.

 

Unsurprisingly, this has attracted an influx of foreigners willing to live and work in the United Arab Emirates to take advantage of the high standard of living and stability.

 

The majority of the expenditures to finance infrastructure and other government spending has been through a mix of oil revenue, savings, and tax revenues.

 

However, with the declining oil prices seen in early 2016, the government of the UAE has been studying ways of diversifying its revenue away from oil and towards more sustainable sources.

 

PRESENT ENVIRONMENT

 

As of April 2016, the following taxes do not exist in the United Arab Emirates:

 

  • Income Taxes
  • Corporate Taxes (Discussions held, but no implementation date yet)
  • Sales Taxes
  • Estate Taxes
  • Wealth Taxes
  • Value-Added Taxes (Expected 1 January 2018)

Despite the general, no taxation nature of the United Arab Emirates, there are several caveats to be aware of, most importantly the VAT implementation in 2018 and other related information, as delineated below.

 

First, most Emirates that comprise the United Arab Emirates actually have statutory laws that stipulate general tax decrees on as much as 50% on “corporate forms”. These laws, however, are currently only enforced on oil and foreign banks, leaving most other companies in other sectors free from corporate tax.

 

Second, there is a 10% municipality tax on services, food, alcohol, and beverages purchased in hotels and other selected entertainment venues. There is also a tax levied on rental income earned by landlords at the rate of 10% for commercial and 5% for residential.

 

Third, there is a GCC-wide custom import duty assessed at a rate of 5%. There are exceptions to this rate depending on the origin of the product and the type of product imported.

 

Fourth, the government charges a 4% transfer tax for the registration of real estate, whether commercial or residential. This was recently increased from the prior level of 2%. The reason cited by the government was to curb speculation in the real estate industry and is paid by the buyer of the real estate.

 

Five, there exists double-taxation treaties with various countries, for which United Arab Emirates free zones offer “Tax Certificates” to local entities for the purpose of evidencing and complying with the arrangement that exists between the United Arab Emirates and the home country. Local entities may also request a Tax Certificate that are issued by the Ministry of Finance of the United Arab Emirates Government.

 

Sixth, the UAE has recently announced its intention to implement a VAT tax regime by 1 January 2018 at 5% on a GCC-wide level.

 

Rest assured, we will stay on top of further developments as they are announced and provide detailed implementation guidance as more information is made available by the United Arab Emirates Government.

 

HOW WE CAN HELP

 

Given the significance of the introduction of a VAT regime in the UAE by 1 January 2018, we have developed a complete service offering in our Tax Department to address the needs of investors, entrepreneurs, households, and businesses seeking to address their compliance with VAT taxes and obtain the latest information for the most efficient structure possible.

 

We can also assist in VAT registration applications, filing of returns, and global tax advisory structuring services.

 

GLOBAL STRUCTURING

 

Whether you need tax filings spread around the world or advice on global transfer pricing, together with our BKR International worldwide member firms we are able to provide clients with cross-border expertise and compliance by leveraging our expertise with member firms around the world to provide clients with the best combination of local knowledge in each jurisdiction of operation, all while having a single local point of contact.